Meeting of the Valley Clean Energy Alliance Board …...82499.04009\31791990.1 Meeting of the Valley Clean Energy Alliance Board of Directors Thursday, February 13, 2020 at 5:30 p.m.

82499.04009\31791990.1

Meeting of the Valley Clean Energy Alliance Board of Directors

Thursday, February 13, 2020 at 5:30 p.m. City of Davis Community Chambers

23 Russell Boulevard, Davis, CA 95616

Meetings are accessible to people with disabilities. Individuals who need special assistance or a disability-related modification or accommodation to participate in this meeting, or who have a disability and wish to request an alternative format for the meeting materials, should contact Alisa Lembke, VCEA Board Clerk/Administrative Analyst, at least two (2) working days before the meeting at (530) 446-2754 or [email protected]. If you have anything that you wish to be distributed to the Board and included in the official record, please hand it to a member of VCEA staff who will distribute the information to the Board members and other staff. Please note that the numerical order of items is for convenience of reference. Items may be taken out of order on the request of any Board member with the concurrence of the Board. Staff recommendations are advisory to the Board. The Board may take any action it deems appropriate on any item on the agenda even if it varies from the staff recommendation.

Board Members: Don Saylor (Chair/Yolo County), Dan Carson (Vice Chair/City of Davis), Tom Stallard (City of Woodland), Gary Sandy (Yolo County), Lucas Frerichs (City of Davis), Angel Barajas (City of Woodland), Wade Cowan (City of Winters), and Jesse Loren (City of Winters) Associate Members: Christopher Cabaldon (City of West Sacramento), Beverly Sandeen (City of West Sacramento) 5:30 p.m. Call to Order

1. Welcome

2. Approval of Agenda

3. Public Comment: This item is reserved for persons wishing to address the Board on any VCEA-related matters that are not otherwise on this meeting agenda. Public comments on matters listed on the agenda shall be heard at the time the matter is called. As with all public comment, members of the public who wish to address the Board are customarily limited to two minutes per speaker, but an extension can be provided at the discretion of the Chair.

CLOSED SESSION

4. A. VCE Board including Associate Board Members: Conference with Legal Counsel – Existing Litigation (Paragraph (1) of subdivision (d) of Section 54956.9) Name of Cases:

(1) In re PG&E Corporation, Debtor; Chapter 11; US Bankruptcy Court, Northern District of California San Francisco Division, Case No. 19-30088(DM) and Case No. 19-30089(DM)

(2) Investigation 19-09-016 related to the consideration of the Ratemaking and other Implications of a Proposed Plan for Resolution of Voluntary Cases filed by PGE pursuant to the Bankruptcy Code, before the California Public Utilities Commission.

1

82499.04009\31791990.1

(3) Safety Order Instituting Investigation (O.I.I.) and Rulemaking i. O. I. I. 15-08-019 ( G&E Safety culture); Order Instituting Investigation on the Commission’s Own Motion to Determine Whether Pacific Gas and Electric Company and PG&E Corporation’s Organizational Culture and Governance Prioritize Safety. ii. O. I. I. 19-06-015 (PG&E Safety Culture and Penalties for 2017 Fires); Order Instituting Investigation on the Commission’s Own Motion into the Maintenance, Operations and Practices of Pacific Gas and Electric Company (U39E) with Respect to its Electric Facilities; and Order to Show Cause Why the Commission Should not Impose Penalties and/or Other Remedies for the Role PG&E’s Electrical Facilities had in Igniting Fires in its Service Territory in 2017 iii. R. 18-12-005 (PSPS Rulemaking); Order Instituting Rulemaking to Examine Electric Utility De-Energization of Power Lines in Dangerous Conditions.

B. Public Employee Performance Evaluation (Government Code Section 54957)

Position Title: Interim General Manager

CONSENT AGENDA

5. Approve January 9, 2020 Board Meeting Minutes. 6. Receive 2020 Long Range Calendar. 7. Receive Financial Update – December 31, 2019 (unaudited) financial statement. 8. Receive February 6, 2020 Regulatory Update provided by Keyes & Fox. 9. Receive Legislative Update and approve support of the following legislation:

a. AB 1567 (Aguiar-Curry) – Creation of a scoping plan for the State to meet its organic waste goals, including use of bio-energy resources.

b. SB 378 (Wiener) Addressing Public Safety Power Shut-off (PSPS) events. c. SB 804 (Weiner) Extend the use of rate reduction bonds to local power agencies. d. SB 917 (Weiner) PG&E Public Take-over Plan.

10. Receive February 6, 2020 Customer Enrollment Update. 11. Receive Community Advisory Committee January 23, 2020 Meeting Summary. 12. Approve contract amendment to extend the contract of Valley Clean Energy regulatory

counsel Keyes & Fox. (Action) 13. Approve contract amendment to increase the rate for Valley Clean Energy co-general counsel

Best, Best & Krieger. (Action) 14. Ratify Amendment 14 to Task Order 3 to the Sacramento Municipal Utility District (SMUD)

agreement extending credit support services and approve Amendment 15 to Task Order 4 to SMUD agreement removing Proxy Power Director obligation. (Action)

15. Approve change to the employee medical benefits offered by Valley Clean Energy and update those changes in the Employee Handbook. (Action)

16. Approve revision to Item #4 of the February 13, 2020 Net Energy Metering (NEM) Policy. 17. Approve Valley Clean Energy Sponsorship Program Guidelines and authorize staff to adjust

guidelines as needed. (Action)

REGULAR AGENDA

18. Recognize service of past Chair (Gerry Braun) and Vice-Chair (Christine Shewmaker) of the Valley Clean Energy Community Advisory Committee. (Ceremonial)

19. Approve Power Purchase Agreement between Valley Clean Energy and Aquamarine Westside LLC for the procurement of energy from a 50 megawatt share of the 250 megawatt Aquamarine Solar Project under development by Westland Solar Park, located in Kings County, California. (Action)

20. Introduce planning process for the development of a strategic plan for Valley Clean Energy and adopt a process timeline. (Action)

2

82499.04009\31791990.1

21. Approve Valley Clean Energy’s Policy regarding potential PG&E allocation of Greenhouse Gas (GHG)-free (Large Hydro and Nuclear) resources to Community Choice Aggregators. (Action)

22. Update on Power Charge Indifference Adjustment (PCIA) and Energy Resource Recovery Account (ERRA). (Informational)

23. Update on Sacramento Council of Governments Electric Vehicle Charging Infrastructure Grant (Informational)

24. Status update and next steps on the potential acquisition of PG&E’s local electricity distribution system. (Informational)

25. Board Member and Staff Announcements: Action items and reports from members of the Board, including announcements, AB1234 reporting of meetings attended by Board Members of VCEA expense, questions to be referred to staff, future agenda items, and reports on meetings and information which would be of interest to the Board or the public.

26. Adjournment

The next VCE Board meeting is scheduled for Thursday, March 13, 2020 at 5:30 p.m. at the City of Woodland Council Chambers, 300 1st Street, Woodland, CA 95695. Public records that relate to any item on the open session agenda for a regular board meeting are available for public inspection. Those records that are distributed less than 72 hours prior to the meeting are available for public inspection at the same time they are distributed to all members, or a majority of the members of the Board. VCEA public records are available for inspection by contacting Board Clerk Alisa Lembke at (530) 446-2750 or [email protected]. Agendas and Board meeting materials can be inspected at VCEA’s offices located at 604 Second Street, Davis, California 95616; those interested in inspecting these materials are asked to call (530) 446-2750 to make arrangements. The documents are also available on the Valley Clean Energy website located at: https://valleycleanenergy.org/about-us/meetings/

3

1

VALLEY CLEAN ENERGY ALLIANCE

Staff Report – Item 5

TO: Valley Clean Energy Alliance Board of Directors

FROM: Alisa Lembke, Board Clerk / Administrative Analyst

SUBJECT: Approval of Minutes from January 9, 2020 Board Meeting

DATE: February 13, 2020 RECOMMENDATION Receive, review and approve the attached Minutes from the January 9, 2020 Board meeting.

4

VCEA Minutes January 9, 2020 Page 1 of 4

MINUTES OF THE VALLEY CLEAN ENERGY ALLIANCE BOARD OF DIRECTORS MEETING

THURSDAY, JANUARY 9, 2020

The Board of Directors of the Valley Clean Energy Alliance duly noticed their special meeting scheduled for Thursday, January 9, 2020 at 5:30 p.m. at the City of Woodland Council Chambers located at 300 1st Street, Woodland, California 95695. Chairperson Don Saylor established that there was a quorum present and began the meeting at 5:31 p.m.

Board Members Present: Don Saylor, Dan Carson, Tom Stallard, Lucas Frerichs, Angel Barajas,

Wade Cowan, and Jesse Loren Associate Members Present: Beverly Sandeen Members Absent: Gary Sandy Associate Members Absent: Christopher Cabaldon

Approval of Agenda

Chairperson Saylor tabled Closed Session Item 4A – Conference with Legal Counsel – Existing Litigation and Item 13 – Approval of Power Purchase Agreement Aquamarine Westside LLC until next meeting. Director Loren made a motion to approve the January 9, 2020 Board Agenda as amended, seconded by Director Barajas. Motion passed with Director Sandy absent.

Public Comment

Chairperson Saylor opened the floor for public comment. No public comment.

CLOSED SESSION: Conference with Legal Counsel – Anticipated Litigation

The Board adjourned their meeting to go into Closed Session at 5:33 p.m. The Board returned to their regular Agenda at 5:38 p.m. Chairperson Saylor reported that the Board had no reportable action out of closed session.

Approval of Consent Agenda

Director Stallard made a motion to approve the Consent Agenda, Items 5 through 11, seconded by Director Cowan. Motion passed unanimously with Director Sandy absent. The following consent items were approved: 5. December 12, 2019 regular Board meeting Minutes; 6. Receipt of 2020 Long Range Calendar; 7. Receipt of Financial Updates – November 30, 2019 (unaudited) financial statements. 8. Receipt of January 3, 2020 Regulatory Update provided by Keyes & Fox; 9. Receipt of January 2, 2020 Customer Enrollment update; 10. Receipt of Community Advisory Committee’s December 5, 2019 Special Meeting Summary; and,

5

VCEA Minutes January 9, 2020 Page 2 of 4

11. Board Member Lucas Frerichs’ participation on the California Community Choice Association (CalCCA) Local Elected’s Coordination Subcommittee.

Consider Draft Guiding Principles related to the potential acquisition of PG&E’s local electricity distribution system

Interim General Manager Mitch Sears introduced this item. He informed those present that CalCCA recently adopted guiding principles. Mr. Sears introduced VCE Staff Victoria Zavattero who briefly reviewed the recommendation. Staff’s recommendation is to adopt a core set of principles to guide the acquisition, ownership and operation of the local distribution system in Yolo County. The following draft guiding principles were presented.

1. Create and maintain an electric system that is reliable, maximizes safety

for all customers and encourages and supports local economic

development.

2. Ensure that rates and bills are affordable for all customer classes.

3. Conduct all business in a manner that is ethical, open and transparent to

customers and communities.

4. Protect workers by preserving labor agreements and benefits.

5. Develop a governance structure that provides for and encourages

customer participation and fosters local decision-making allowing each

community to implement energy solutions that are right for them.

6. Demonstrate leadership in climate, clean energy and GHG reduction as

well as general environmental stewardship.

Director Loren made a motion to adopt the guiding principles listed above, seconded by Director Carson. Motion passed by the following vote: AYES: Saylor, Carson, Stallard, Cowan, Frerichs, Barajas, Loren

NOES: None ABSENT: Sandy

ABSTAIN: None

Power Purchase Agreement

This item was tabled.

2019 Year-end Review (Informational)

Mr. Sears reviewed VCE’s Integrated Vision Statement – Short Term, Long Term and how these visions were achieved. Mr. Sears informed those present that VCE has either met or exceeded the short-term goals noting that VCE has met the initial 30 days cash reserve and is in progress toward reaching 90 day cash reserve. Director Stallard inquired with Staff about the joint rate mailer he received. VCE Staff Jim Parks stated that the all CCAs are required to join with their IOU to send

6

VCEA Minutes January 9, 2020 Page 3 of 4

out the rate comparisons to its customers. Director Stallard noted that PG&E’s “green” electricity rate is less expensive than VCE’s UltraGreen rate. Mr. Sears reviewed the Integrated Vision – Long term. Chairperson Saylor requested that Staff apprise the Board about resource solicitations and/or programs that may be developing within the Board Members’ jurisdictions. He suggested that possibly this could be provided through regular status reports. Mr. Sears reviewed VCE’s notable accomplishments. VCE Staff George Vaughn reviewed 2019 finance and internal operations and VCE’s financial accomplishments and challenges. VCE Staff Jim Parks reviewed customer care, marketing and outreach. He informed those present that the most recent marketing campaign was to build awareness of who VCE is. Mr. Parks reviewed Contact Center Customer Care information and the status of the SACOG “Electrify Yolo” grant. The Board and Staff discussed the SACOG grant. The Board asked that Staff provide more information and a detailed timeline. It is the desire of the Board to move quickly on this grant and they offered their assistance. Director Frerichs asked where the City of Winters fits into the grant. Mr. Parks informed those present that there are plans to install a DC fast charger in Winters. Director Barajas expressed concern about the opt out rate and if Staff knew why customers were opting out. Mr. Sears informed those present that the opt out rate is within the expected 10% range; however, Staff would like to see this number decrease. Mr. Parks informed those present that customers are asked why they are opting out. Customers have several options to choose from with some marking “other” and others marking that they do not like default enrollment or stating that our rates are higher than PG&E. The Board and Staff discussed approaches to get back customers who opted out. Mr. Parks reviewed marketing and outreach activities and the next steps on programs. Chairperson Saylor opened the floor to public comment. Mr. Gene Livingstone asked how VCE generates revenue. Mr. Sears offered to discuss this with Mr. Livingstone after the conclusion of the Board meeting.

Board Member and Staff Announcements

Mr. Sears informed those present that Staff have been going through the recruitment process for an Assistant General Manager/Director of Power Services. It is the hopes that the person will start in early February 2020.

7

VCEA Minutes January 9, 2020 Page 4 of 4

Mr. Sears informed those present that it is anticipated that the River City Bank revolving line of credit will be on the Board’s February 2020 agenda. Mr. Sears informed those present that the Woodland City Manager announced his retirement. Director Frerichs informed those present that he got involved with the Elected’s CalCCA Local Elected Subcommittee when he attended the CalCCA annual meeting in November 2019. This is a coordinate effort with CCA’s throughout the State. Director Saylor informed those present that he would like the Board to be involved in the strategic planning process.

Adjournment

Chairperson Saylor adjourned the meeting at 7:06 p.m. to the next meeting scheduled for Thursday, February 13, 2020 at 5:30 p.m. at the City of Davis Community Chambers 23 Russell Boulevard, Davis, California.

Alisa M. Lembke VCEA Board Secretary

8

VALLEY CLEAN ENERGY ALLIANCE Board of Directors Meeting

Staff Report - Item 6

____________________________________________________________________________________

TO: VCEA Board FROM: Alisa Lembke, Board Clerk/Administrative Analyst SUBJECT: Community Advisory Committee 2020 Long-Range Calendar DATE: February 13, 2020

Recommendation Please find attached the Board and Community Advisory Committee long-range calendar for 2020. Please note that two (2) meetings have been scheduled in the City of Winters:

1. May 14, 2020 2. October 8, 2020

The meetings are scheduled to be held at City of Winters - Police/Fire/Public Safety Facility.

9

2/5/20

VALLEY CLEAN ENERGY 2020 Meeting Dates and Proposed Topics – Board and Community Advisory Committee

MEETING DATE TOPICS

ACTION

January 9, 2020 Board WOODLAND

• •

January 23, 2020

Advisory Committee WOODLAND

• •

February 13, 2020 Board DAVIS

• Power Purchase Agreement

• Action

February 27, 2020 Advisory Committee

DAVIS

• Task Groups – Present Tasks/Projects

• Update on Regulatory Assistance Project

• Informational

• Informational

March 12, 2020 Board WOODLAND

• Preliminary FY20/21 Operating Budget (Regular)

• River City Bank Revolving Line of Credit

• Appoint City of Winters seats to CAC

• Power Purchase Agreement

• Review

• Action

• Action

• Action

March 26, 2020 Advisory Committee WOODLAND

• Long Term Load Forecast – Biannual 2020 Integrated Energy Planning Report

• Review Draft Integrated Resource Plan (IRP) / Public Workshop, CAC to provide recommendation

• Information

• Informational/Action

April 9, 2020 Board DAVIS

• Review Draft Integrated Resource Plan and CAC Recommendation

• Long Term Load Forecast – Biannual 2020 Integrated Energy Planning Report

• Adoption of Integrated Resource Plan (due May 1, 2020)

• Informational / Action

• Information

• Action

April 23, 2020 Advisory Committee

DAVIS

•

10

May 14, 2020

Board WINTERS

• •

May 28, 2020 Advisory Committee WOODLAND

• Information related to 2021 Integrated Resource Plan Update • Information

June 11, 2020 Board DAVIS

• Final Approval of FY20/21 Operating Budget

• Extension of Waiver of Opt-Out Fees for one more year (??)

• Re/Appointment of Members to Community Advisory Committee

• Approval

• Action

• Action

June 25, 2020 Advisory Committee

DAVIS

• Information related to 2021 Integrated Resource Plan Update

•

• Discussion

•

July 9, 2020 Board WOODLAND

•

•

July 23, 2020 Advisory Committee WOODLAND

• Information related to 2021 Integrated Resource Plan Update • Discussion

August 13, 2020 Board DAVIS

August 27, 2020 Advisory Committee

DAVIS

• Revised Procurement Guide – Review • Discussion

September 10, 2020 Board WOODLAND

• Residential Time of Use Rate Classes Report

• Discussion on River City Bank Revolving Line of Credit

• Information/Discussion

• Discussion

September 24, 2020

Advisory

Committee WOODLAND

• Committee Evaluation of Calendar Year End (Draft Report)

• Revised Procurement Guide – Review Draft Recommendation

• Discussion

• Discussion

October 8, 2020 Board WINTERS

• Approval of FY19/20 Audited Financial Statements (James Marta & Co.)

• River City Bank Revolving Line of Credit

• Action

• Discussion/Action

October 22, 2020 Advisory Committee

DAVIS

• Committee Evaluation of Calendar Year End (Draft Report)

• Revised Procurement Guide- Review Draft Recommendation

• Discussion

• Discussion

11

November 12, 2020 Board WOODLAND

• •

November 26, 2020 Thanksgiving Holiday – Rescheduled to 3rd Thursday, November 19, 2020

Advisory Committee WOODLAND

• Committee Evaluation of Calendar Year End (Draft Report)

• Revised Procurement Guide – Finalize Recommendation to Board

• Discussion

• Action: Recommendation to Board

December 10, 2020 Board DAVIS

• Election of Officers for 2020

• Nominations

December 24, 2020

Rescheduled to 3rd Thursday, December 17, 2020

Advisory Committee

DAVIS

• Election of Officers for 2020

• Finalization of Committee Calendar Year End Report

• Nominations

• Approve Report

January 14, 2021 Board WOODLAND

• Receive CAC Calendar Year End Report

• Approve Revised Procurement Guide

• Receive Report

• Action

January 28, 2021 Advisory Committee WOODLAND

• Review and Discuss Task Groups • Discuss/Action

12

VALLEY CLEAN ENERGY ALLIANCE

Staff Report – Item 7

______________________________________________________________________________

TO:

Valley Clean Energy Alliance Board of Directors

FROM: George Vaughn, Finance and Operations Director, VCEA

Mitch Sears, Interim General Manager, VCEA

SUBJECT:

Financial Update – December 31, 2019 (unaudited) financial statements

(with comparative year to date information) and Actual vs. Budget year to

date ending December 31, 2019

DATE: February 13, 2020

RECOMMENDATION:

Accept the following Financial Statements (unaudited) for the period of December 1, 2019 to

December 31, 2019 (with comparative year to date information) and Actual vs. Budget year to date

ending December 31, 2019.

BACKGROUND & DISCUSSION:

The attached financial statements are prepared in a form to satisfy the debt covenants with River City

Bank pursuant to the Line of Credit and are required to be prepared monthly.

The Financial Statements include the following reports:

• Statement of Net Position

• Statement of Revenues, Expenditures and Changes in Net Position

• Statement of Cash Flows

In addition, staff is reporting the Actual vs. Budget variances year to date ending December 31, 2019.

Financial Statements for the period December 1, 2019 – December 31, 2019

In the Statement of Net Position, VCEA as of December 31, 2019 has a total of $13,168,080 in its checking,

money market and lockbox accounts, $1,100,000 restricted assets for the Debt Service Reserve account

and $902,231 restricted assets for the Power Purchases Reserve account. VCEA has incurred obligations

from Member agencies and SMUD and owes as of December 31, 2019 $273,364 and $578,055

respectively for a grand total of $851,419. VCEA began paying SMUD for the monthly operating

expenditures (starting with December 2018 expenditures) and repayment of the deferred amount of

$1,522,433 over a 24-month period. VCEA began paying the Member agencies for the quarterly

13

reimbursable expenditures starting in June 2019 and repayment of the deferred amount of $556,188

over a 12-month period.

The term loan with River City Bank includes a current portion of $395,322 and a long-term portion of

$1,548,345 as of December 31, 2019, for a total of $1,943,667. At December 31, 2019, VCE’s net position

is $13,770,181.

In the Statement of Revenues, Expenditures and Changes in Net Position, VCEA recorded $2,629,570 of

revenue (net of allowance for doubtful accounts) of which $3,608,877 was billed in December and

($858,415) represent estimated unbilled revenue. The cost of the electricity for the December revenue

totaled $2,611,330. For December, VCEA’s gross margin is approximately 0.69% and operating income

totaled negative ($318,984). The year-to-date change in net position was $6,441,348.

In the Statement of Cash Flows, VCEA cash flows from operations was negative ($1,417,172), due to December cash receipts of revenues exceeding the monthly operating expenses and the SMUD November power invoice being paid after November 30, which made December cash flow less favorable.

Actual vs. Budget Variances for the year to date ending December 31, 2019

Below are the financial statement line items with variances >$50,000 and 5%:

Salaries & Wages/Benefits - ($129,837) and (43%) – variance is due to having more budgeted filled

positions at VCE than we actually have on staff.

SMUD Operating Services - ($165,026) and (88%) – variance is mainly due to SMUD not having billed for

the IRP update and NEM roll-in analysis included in the budget.

PG&E Acquisition Consulting - ($123,255) and (100%) - variance is due to PG&E asset acquisition

expenses not having been applicable at the time the budget was constructed.

Marketing Collateral - ($99,524) and (90%) - variance is due to major marketing campaigns in the first six

months of the year being higher than originally anticipated in the budget

Contingency - ($117,929) and (100%) - variance is due to VCE not having required usage of contingency

funds to date; this is offset by $123,255 of PG&E acquisition-related expenses.

Attachments:

1) Financial Statements (Unaudited) December 1, 2019 to December 31, 2019 (with comparative year

to date information.)

2) Actual vs. Budget for year to date ending December 31, 2019

14

VALLEY CLEAN ENERGY ALLIANCE

FINANCIAL STATEMENTS

(UNAUDITED)

FOR THE PERIOD OF DECEMBER 1 TO DECEMBER 31, 2019

PREPARED ON FEBRUARY 4, 2020

15

2

ASSETS

Cash and cash equivalents 13,168,080$

Accounts receivable, net of allowance 3,624,492

Accrued revenue 1,959,825

Prepaid expenses 2,500

Other current assets and deposits 2,540

Total current assets 18,757,437

Restricted assets:

Debt service reserve fund 1,100,000

Power purchase reserve fund 902,231

Total restricted assets 2,002,231

Noncurrent assets:

Other noncurrent assets and deposits 100,000

Total noncurrent assets 100,000

TOTAL ASSETS 20,859,668$

LIABILITIES

Current liabilities:

Accounts payable 658,247$

Accrued payroll 3,496

Interest payable 8,253

Due to member agencies 273,364

Accrued cost of electricity 2,781,610

Other accrued liabilities 851,839

Security deposits - energy supplies 515,640

User taxes and energy surcharges 53,371

Current Portion of LT Debt 395,322

Total current liabilities 5,541,142

Noncurrent liabilities

Term Loan- RCB 1,548,345

Total noncurrent liabilities 1,548,345

TOTAL LIABILITIES 7,089,487$

NET POSITION

Restricted

Local Programs Reserve 137,702$

Restricted 2,002,231$

Unrestricted 11,630,248 TOTAL NET POSITION 13,770,181$

(UNAUDITED)

VALLEY CLEAN ENERGY ALLIANCE

STATEMENT OF NET POSITION

DECEMBER 31, 2019

16

3

FOR THE

PERIOD ENDING

DECEMBER 31, 2019

YEAR TO

DATE

OPERATING REVENUE

Electricity sales, net 2,629,570$ 31,095,633$

TOTAL OPERATING REVENUES 2,629,570 31,095,633

OPERATING EXPENSES

Cost of electricity 2,611,330 22,369,285

Contract services 200,587 1,544,833

Staff compensation 94,599 512,748

General, administration, and other 42,038 207,924

TOTAL OPERATING EXPENSES 2,948,554 24,634,790

TOTAL OPERATING INCOME (LOSS) (318,984) 6,460,843

NONOPERATING REVENUES (EXPENSES)

Interest income 9,210 41,937

Interest and related expenses (7,045) (61,432)

TOTAL NONOPERATING REVENUES

(EXPENSES) 2,165 (19,495)

CHANGE IN NET POSITION (316,819) 6,441,348

Net position at beginning of period 14,087,000 7,328,833 Net position at end of period 13,770,181$ 13,770,181$

(WITH COMPARATIVE YEAR TO DATE INFORMATION)

VALLEY CLEAN ENERGY ALLIANCE

STATEMENT OF REVENUES, EXPENDITURES AND

(UNAUDITED)

CHANGES IN NET POSITION

FOR THE PERIOD OF DECEMBER 1, 2019 TO DECEMBER 31, 2019

17

4

FOR THE

PERIOD ENDING

DECEMBER 31, 2019 YEAR TO DATE

CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from electricity sales 4,284,058$ 34,798,225$

Receipts for security deposits with energy suppliers - 515,640

Payments to purchase electricity (5,305,555) (24,591,163)

Payments for contract services, general, and adminstration (300,978) (2,052,894)

Payments for staff compensation (94,697) (513,041)

Net cash provided (used) by operating activities (1,417,172) 8,156,767

CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES

Loans from member agencies (1,500,000)

Interest and related expenses (10,649) (165,491) Net cash provided (used) by non-capital financing

activities (43,593) (1,698,434)

CASH FLOWS FROM INVESTING ACTIVITIES

Interest income 9,210 41,937

Net cash provided (used) by investing activities 9,210 41,937

NET CHANGE IN CASH AND CASH EQUIVALENTS (1,451,555) 6,500,270

Cash and cash equivalents at beginning of period 16,621,866 8,670,042

Cash and cash equivalents at end of period 15,170,311$ 15,170,312$

Cash and cash equivalents included in:

Cash and cash equivalents 13,168,080$ 13,168,080$

Restricted assets 2,002,231 2,002,231 Cash and cash equivalents at end of period 15,170,311$ 15,170,311$

VALLEY CLEAN ENERGY ALLIANCE

STATEMENTS OF CASH FLOWS

FOR THE PERIOD OF DECEMBER 1 TO DECEMBER 31, 2019

(WITH YEAR TO DATE INFORMATION)

(UNAUDITED)

18

5

FOR THE

PERIOD ENDING

DECEMBER 31, 2019 YEAR TO DATE

Operating Income (Loss) (318,984)$ 6,460,843$

(Increase) decrease in net accounts receivable 781,027.00 1,370,781.00

(Increase) decrease in accrued revenue 859,732 2,335,888.00

(Increase) decrease in prepaid expenses 9,497 (2,500.00)

(Increase) decrease in inventory - renewable energy credits 76,820 207,168.00

Increase (decrease) in accounts payable 56,790 72,127.00

Increase (decrease) in accrued payroll (98) (293.00)

Increase (decrease) in due to member agencies (19,492) (136,945.00)

Increase (decrease) in accrued cost of electricity (2,771,045) (2,429,046.00)

Increase (decrease) in other accrued liabilities (105,148) (232,819.00)

Increase (decrease )security deposits with energy suppliers - 515,640.00

Increase (decrease) in user taxes and energy surcharges 13,729 (4,077.00)

Net cash provided (used) by operating activities (1,417,172)$ 8,156,767$

Adjustments to reconcile operating income to net cash provided

(used) by operating activities:

RECONCILIATION OF OPERATING INCOME TO NET

CASH PROVIDED (USED) BY OPERATING ACTIVITIES

(WITH YEAR TO DATE INFORMATION)

(UNAUDITED)

FOR THE PERIOD OF DECEMBER 1 TO DECEMBER 31, 2019

VALLEY CLEAN ENERGY ALLIANCE

STATEMENTS OF CASH FLOWS

19

VALLEY CLEAN ENERGY ACTUAL VS. BUDGET FYE 6-30-2020FOR THE YEAR TO DATE ENDING 12-31-19

12/31/2019 12/31/2019

YTD YTD YTD %

Description FY2020 Actuals FY2020 Budget Variance over/-under

Electric Revenue 31,095,631$ 32,234,286$ (1,138,655)$ -4%Interest Revenues 41,938 54,829 (12,891) -24%

Purchased Power 22,369,285 22,501,286 (132,002) -1%Labor & Benefits 512,749 589,459 (76,710) -13%

Salaries & Wages/Benefits 174,571 304,408 (129,837) -43%Contract Labor 324,316 278,751 45,565 16%Human Resources & Payroll 13,863 6,300 7,563 120%

Office Supplies & Other Expenses 65,041 63,945 1,096 2%Technology Costs 5,092 4,632 460 10%Office Supplies 1,251 613 638 104%Travel 4,218 2,400 1,818 76%CalCCA Dues 54,480 54,500 (20) 0%Memberships - 1,800 (1,800) -100%

Contractual Services 1,544,806 1,539,467 5,339 0%Don Dame 11,037 9,000 2,037 23%SMUD - Credit Support 277,273 324,612 (47,339) -15%SMUD - Wholesale Energy Services 282,072 282,072 - 0%SMUD - Call Center 330,099 333,482 (3,384) -1%SMUD - Operating Services 21,974 187,000 (165,026) -88%Legal 67,101 84,000 (16,899) -20%Regulatory Counsel 86,144 92,640 (6,496) -7%Joint Regulatory 33,612 15,000 18,612 124%Legislative 30,000 30,000 - 0%Accounting Services 8,554 12,000 (3,446) -29%Audit Fees 63,000 58,500 4,500 8%PG&E Acquisition Consulting 123,255 - 123,255 100%Marketing Collateral 210,685 111,161 99,524 90%

Rents & Leases 8,649 8,652 (3) 0%Hunt Boyer Mansion 8,649 8,652 (3) 0%

Other A&G 118,632 153,998 (35,366) -23%PG&E Data Fees 115,905 116,719 (814) -1%Community Engagement Activities & Sponsorships 126 3,000 (2,874) -96%Insurance 2,601 3,679 (1,078) -29%New Member Expenses - 30,000 (30,000) -100%Banking Fees - 600 (600) -100%

Miscellaneous Operating Expenses 15,629 3,066 12,563 410%Contingency - 117,929 (117,929) -100%

TOTAL OPERATING EXPENSES 24,634,790$ 24,977,803$ (343,013)$ -1%

Interest Expense - Munis 14,965 27,716 (12,751) -46%Interest on RCB loan 38,463 43,582 (5,119) -12%Interest Expense - SMUD 8,004 8,637 (633) -7%Miscellaneous Non-Operating - - - 0%

NET INCOME 6,441,348$ 7,231,378$ (790,030)$ -11%

20

1

VALLEY CLEAN ENERGY ALLIANCE

Staff Report – Item 8

To: Valley Clean Energy Alliance Board of Directors From: Mitch Sears, Interim General Manager Subject: Regulatory Monitoring Report – Keyes & Fox Date: February 13, 2020 ______________________________________________________________________________ Please find attached Keyes & Fox’s January 2020 Regulatory Memorandum dated February 6, 2020, an informational summary of the key California regulatory and compliance-related updates from the California Public Utilities Commission (CPUC).

Attachment: Keyes & Fox Regulatory Memorandum dated February 6, 2020

21

1

Valley Clean Energy Alliance Regulatory Monitoring Report

To: Valley Clean Energy Alliance (“VCE”) Board of Directors From: Sheridan Pauker, Partner, Keyes & Fox, LLP

Tim Lindl, Partner, Keyes & Fox LLP Ben Inskeep, Sr. Analyst, EQ Research, LLC Subject: Regulatory Update Date: February 6, 2020 ______________________________________________________________________

Summary

Keyes & Fox LLP and EQ Research, LLC, are pleased to provide VCE’s Board of Directors with this monthly informational memo describing key California regulatory and compliance-related updates from the California Public Utilities Commission (CPUC). A Glossary of Acronyms used is provided at the end of this memo.

In summary, this month’s report includes regulatory updates on the following priority issues:

• PG&E’s 2020 ERRA Forecast: On January 24, 2020, the ALJ issued a Proposed Decision (PD) that would increase the system average PCIA for the 2017 vintage to $0.0317/kWh (capped) and $0.0423/kWh (uncapped, including a refund that will be granted via the ERRA Compliance docket – next bullet).

• PG&E’s 2018 ERRA Compliance: The ALJ issued a PD that would approve the settlement agreement between PG&E, Public Advocates Office, and the Joint CCAs (EBCE, PCE, and SVCE). Public Advocates Office filed comments on the PD. The PD establishes the amount of the refund for a prior misallocation related to the Cost Allocation Mechanism.

• 2018 Rate Design Window: The ALJs issued a PD addressing Phase 3 issues (primarily residential fixed charges and minimum bills) that would largely retain the overarching design of residential rates as they are now.

• RPS Rulemaking: VCE and other retail sellers filed updated 2019 RPS Procurement Plans, as directed by the CPUC in D.19-12-042. EnerCal filed a Petition for Modification of D.19-12-042, requesting to be removed from the list of entities the CPUC found to be deficient in its 2019 RPS Procurement Plan filing.

• Investigation of PG&E Bankruptcy Plan: The ALJ amended the schedule in response to a motion by PG&E. The unsecured noteholders filed a Motion to withdraw from the proceeding following an agreement it reached with PG&E to support its reorganization plan. The ALJ issued a Ruling granting in part the Motion. PG&E filed Notice of its amended reorganization plan with supporting testimony. A wildfire victim requested evidentiary and public participation hearings.

• Investigation into PG&E Violations Related to Wildfires: PG&E filed a response to an ALJ Ruling requesting more information on the implications of the Settlement Agreement. The ALJ issued a Ruling canceling the dates for the evidentiary hearing and briefing in light of the

22

2

Settlement Agreement. The AHC filed a Motion to withdraw from the proceeding following an agreement it reached with PG&E to support its reorganization plan. Parties filed comments and reply comments on the Settlement Agreement.

• IRP Rulemaking: Parties filed reply comments on the ALJ’s Ruling on the proposed Reference System Portfolio. The ALJ issued a Ruling allowing LSEs to file updated load forecasts out to 2030. GenOn Holdings and the City of Oxnard filed a Petition for Modification of D.19-11-016. The ALJ extended the deadlines established in a January 24, 2020, Ruling, as well as notified parties that the IRP filing deadline would be extended to July 1, 2020. A workshop on the modified cost allocation for backstop procurement was also held.

• RA Rulemaking (2021-2022): Commissioner Randolph issued a Scoping Memo and Ruling.

• RA Rulemaking (2019-2020): The Assigned Commissioner issued a Ruling providing Energy Division’s State of the Market Resource Adequacy Report, revised to include October-December 2019 data. The CPUC issued D.20-01-004 addressing a September 2019 Motion from a group of solar and storage parties to establish the RA qualifying capacity of hybrid resources (i.e., storage paired renewables) for both in front of the meter and behind the meter configurations.

• PG&E’s Phase 1 GRC: The ALJs issued a Ruling granting a PG&E motion for oral argument. The AHC filed a Motion to withdraw from the proceeding following an agreement it reached with PG&E to support its reorganization plan. PG&E filed a Motion requesting official notice of information in its 10-K Annual Reports showing its total number of electric and gas customers for 2013-2018. Parties filed comments and reply comments on the proposed Settlement Agreement. Parties also filed reply briefs on disputed issues outside of the Settlement Agreement.

• PG&E’s Phase 2 GRC: Parties including a group of northern California CCAs protested PG&E’s Phase 2 GRC application and PG&E filed its response. A prehearing conference was held.

• PCIA Rulemaking: Comments and reply comments on Working Group 2’s (Prepayment) Final Report were filed by parties. The ALJ issued rulings modifying the procedural schedule to push back the date of Working Group 3’s report (Portfolio Optimization and Cost Reduction and Allocation and Auction) and opportunities for comments and replies. The CPUC issued D.20-01-030, which modifies D.18-10-019 (October 2018) and denies requests for its rehearing.

• Direct Access Rulemaking: A workshop was held on an Energy Division study that will inform the CPUC’s recommendations to the Legislature on further expanding Direct Access. Workshop parties submitted informal comments and reply comments.

• Wildfire Cost Recovery Methodology Rulemaking: No updates this month. (An August PG&E Application for Rehearing remains pending regarding D.19-06-027, establishing criteria and a methodology for wildfire cost recovery, which has been referred to as a "Stress Test" for determining how much of wildfire liability costs that utilities can afford to pay.)

• Investigation into PG&E’s Organization, Culture and Governance: No significant updates this month. The AHC filed a Motion to withdraw from the proceeding following an agreement it reached with PG&E to support its reorganization plan.

• Wildfire Fund Non-Bypassable Charge (AB 1054): No significant updates this month. The AHC filed a Motion to withdraw from the proceeding following an agreement it reached with PG&E to support its reorganization plan. (In November, a citizen intervenor filed an Application for Rehearing of D.19-10-056, which approved the imposition of a non-bypassable charge to fund the Wildfire Fund.)

• Other Regulatory Developments:

o CPUC Approves Changes to SGIP Funding: On January 27, the CPUC issued D.20-01-021 establishing funding and program design for the 2020-2024 SGIP Program.

23

3

o CPUC Modifies GRC Filing Schedule: The CPUC issued D.20-01-002, changing the

timing of large IOU general rate case (GRC) filings from a three-year to a four-year cycle (Docket No. R.13-11-006) beginning after the 2023 GRC.

o CPUC Approves Changes to SGIP Funding: On January 27, the CPUC issued D.20-01-021 establishing funding and program design for the 2020-2024 SGIP Program.

PG&E’s 2020 ERRA Forecast

On January 24, 2020, the ALJ issued a Proposed Decision (PD).

• Background: ERRA forecast proceedings establish the amount of the PCIA and other non-bypassable charges for the following year, as well as fuel and purchased power costs associated with serving bundled customers that utilities may recover in rates.

PG&E is proposing to increase the uncapped 2020 PCIA rates for residential customers from $0.02709/kWh to $0.04548/kWh for 2017 vintage customers and from $0.02979/kWh to $0.04567/kWh for 2018 vintage customers. A cap limiting the increase to $0.005/kWh would apply to each of these rates, subject to a potential trigger mechanism that would increase the rates beyond the cap. The PCIA rate for 2020 vintage residential customers, which is not capped because there is no cap for bundled customers (which make up the 2020 vintage), would be $0.04452/kWh. Of note, PG&E expects CCA and DA providers to serve more than 54% of PG&E’s system retail sales in 2020.

Details: The PD generally sides with PG&E on the remaining contested issues (PG&E had already agreed to changes on nearly $700 million worth of issues prior to the PD). The PD would approve the following revenue requirements as proposed and subsequently revised by PG&E:

o The 2020 ERRA revenue requirement of $3.014 billion.

o The PCIA revenue requirement of $3.149 billion.

o The Competition Transition Charge (CTC) revenue requirement of $112 million.

o The Cost Allocation Mechanism (CAM) revenue requirement of $205 million.

o The Tree Mortality Non-Bypassable Charge revenue requirement of $102 million.

o The utility-owned generation revenue requirement of $2.260 billion.

• Analysis: This proceeding will establish the amount of the PCIA for VCE’s 2020 rates and the level of PG&E’s generation rates for bundled customers. The PCIA revenue requirement detailed above is now shared between bundled and unbundled customers. PG&E’s requested PCIA revenue requirement for unbundled customers is nearly $1.7 billion, nearly double the final revenue requirement for unbundled customers from last year.

• Next Steps: Opening and reply comments, respectively, are due February 13 and February 18, 2020. The PD may be heard, at the earliest, at the CPUC’s February 27, 2020, Business Meeting.

• Additional Information: Proposed Decision (January 24, 2020); E-Mail Ruling extending comments deadline on November Update. Scoping Memo and Ruling (August 22, 2019); Application (June 3, 2019); Testimony available on PG&E’s regulatory webpage (June 3, 2019); Docket No. A.19-06-001.

PG&E’s 2018 ERRA Compliance

On December 31, 2020, the ALJ issued a PD that would approve the settlement agreement between PG&E, Public Advocates Office, and the Joint CCAs (EBCE, PCE, and SVCE). On January 21, Public Advocates Office filed comments on the PD. No party filed reply comments.

24

4

• Background: ERRA compliance review proceedings review the utility’s compliance in the preceding year regarding energy resource contract administration, least-cost dispatch, fuel procurement, and the ERRA balancing account. In its application, PG&E requested that the CPUC find that it 2018 PG&E complied with its CPUC-approved Bundled Procurement Plan (BPP) in the areas of fuel procurement, administration of power purchase contracts, greenhouse gas compliance instrument procurement, and least-cost dispatch of electric generation resources, as well as that it managed its utility-owned generation (UOG) facilities reasonably. PG&E also requested recovery of $4.7 million for Diablo Canyon seismic study costs.

• Details: The PD would approve the Settlement Agreement resolving all disputed issues raised by parties to this proceeding. In the Settlement Agreement, the Joint CCAs agreed to withdraw their recommendation that PG&E be required to provide more details on the timing and methodology used to distribute over-collected funds via PCIA, determining that the July 29, 2019 Supplemental Testimony submitted in PG&E's 2020 ERRA Forecast Application (A.19-06-001) contains sufficient information to determine that both bundled and unbundled customers will see simultaneous rate adjustments addressing the prior misallocation of Cost Allocation Mechanism-related costs through the PCIA component of their respective rates. Those adjustments to the PCIA will occur through the Portfolio Allocation Balancing Account to avoid a situation where now-departed customers pay twice for the same energy and capacity. PG&E agreed to participate in a workshop with other California IOUs in order to develop and standardize renewable and storage resource reporting requirements and to certain modest cost disallowances.

• Analysis: This proceeding will address whether PG&E correctly calculated and accounted for the actual costs it incurred in 2018 and whether it managed its portfolio of contracts and UOG in a reasonable manner.

• Next Steps: This PD is unopposed on the consent agenda for the CPUC’s February 6, 2020 Business Meeting.

• Additional Information: Proposed Decision approving Settlement Agreement (December 31, 2019); Scoping Memo and Ruling (June 3, 2019); Notice of Prehearing Conference (April 17, 2019); Response of EBCE and PCE (April 5, 2019); Resolution categorizing proceeding as ratesetting (March 14, 2019); PG&E Application (February 28, 2019); Docket No. A.19-02-018.

2018 Rate Design Window

On February 5, 2020, the ALJs issued a Proposed Decision addressing Phase 3 issues (primarily residential fixed charges and minimum bills) that would largely retain the overarching design of residential rates as they are now.

• Background: The IOUs’ RDW applications have been consolidated into one proceeding. This proceeding is divided into three phases, with the second phase further bifurcated. A May 2018 Phase 1 Decision granted PG&E approval to begin transitioning eligible residential customers to TOU rates beginning in October 2020. A December 2018 Phase 2A Decision addressed PG&E’s restructuring of the CARE discounts into a single line item percentage discount to the customer’s total bill. The July 2019 Phase 2B Decision made determinations regarding PG&E’s rate design under its default TOU roll out beginning in October 2020 and established a process for a CCA wishing to have its customers defaulted to TOU generation rates. The proceeding is now focused on Phase 3, which considers the IOUs’ proposals for fixed charges and/or minimum bills.

• Details: The PD would find that the utilities failed to demonstrate that their fixed charge proposals would be met with customer acceptance and understanding of what would be a novel rate design for California. It would reject PG&E’s proposal to establish a $6.37/month fixed charge. The PD would allow PG&E to increase the standard minimum bill amount, currently $10/month, for 2020 to reflect the CPI inflation percentages for 2018 and 2019, with an annual CPI adjustment

25

5

beginning in 2021. The CARE rate will remain at the current $5/month rate as adjusted for inflation.

The PD would direct that the minimum bill amounts be calculated based on distribution charges only beginning October 1, 2020. This is a shift from present design under which the minimum bill is assessed based on all non-generation volumetric rates, which also include transmission and other non-bypassable charges. It also would determine that if a customer does pay a fixed charge under an optional rate that they choose to enroll in, the customer may not also be charged a minimum bill.

• Analysis: This proceeding will impact the timing, details, and implementation of residential TOU rates for bundled PG&E customers as well as VCE customers via rate design changes to the distribution component of customer bills. It could affect the level of VCE’s rates compared to PG&E’s, and to the extent VCE mirrors PG&E’s residential rate design, lead to changes in the way VCE structures it residential rates. CCAs are not obligated to default their customers to TOU generation rates, but regardless of whether a CCA offers TOU generation rates, CCA customers will be subject to default TOU distribution rates. However, the pending Track 3 PD, if adopted, would not result in major residential rate design changes for PG&E customers, as it rejects PG&E’s proposed fixed charge and only slightly modifies PG&E’s existing minimum bill.

• Next Steps: Comments on the PD are due February 25, 2020, replies are due March 2, 2020, and the PD may be adopted, at the earliest, at the CPUC’s March 12, 2020, meeting.

• Additional Information: Proposed Decision on Track 3 issues (February 5, 2020); D.19-07-004 in Phase IIB (July 19, 2019); PG&E Phase III Revised Testimony on fixed charges (April 12, 2019, and March 29, 2019); D.18-12-004 on Phase IIA Issues (December 21, 2018); Ruling clarifying scope (July 31, 2018); D.18-05-011 (Phase I) on the timing of a transition to default TOU rates (May 17, 2018); Amended Scoping Memo (April 10, 2018); PG&E Rate Design Window Application & Testimony (December 20, 2017); Docket No. A.17-12-011 (consolidated).

RPS Rulemaking

On January 7, 2020, EnerCal filed a Petition for Modification of D.19-12-042, requesting to be removed from the list of entities the CPUC found to be deficient in its 2019 RPS Procurement Plan filing. On January 29, 2020, VCE and other retail sellers filed updated 2019 RPS Procurement Plans, as directed by the CPUC in D.19-12-042.

• Background: This proceeding addresses ongoing RPS issues. VCE filed its 2019 RPS Procurement Plan on June 21, 2019, and its 2018 RPS Compliance Report on August 1, 2019. D.19-12-042, issued December 2019, required VCE to file an updated 2019 RPS Procurement Plan to address two deficiencies identified: (1) Least-Cost, Best-Fit (LCBF) information and (2) demonstration of compliance with the long-term contracting requirement.

• Details: EnerCal requested modification to be removed from the list of entities found to have filed a deficient 2019 RPS Procurement Plan, saying it has never served load in California, so it does not have RPS requirements, and its inclusion in the list of deficient entities required to refile within 30 days was in error. VCE has asked the CPUC’s Energy Division to look into whether the finding that its 2019 RPS Procurement Plan was deficient was the result of a clerical error.

• Analysis: D.19-09-007 on new CCAs’ 2018 RPS Procurement Plans, D.19-08-007 on RPS enforcement actions for two ESPs, and D.19-12-042 on 2019 RPS Procurement Plans together reinforce the CPUC’s increasing scrutiny of CCAs and their compliance obligations, and the potentially large penalties associated with non-compliance.

Remaining issues to be addressed in this proceeding include a determination on the revised 2019 RPS Procurement Plans, as well as issues that could impact future RPS compliance obligations, such as potentially allowing LSEs like VCE to forgo filing a separate RPS Procurement Plan in 2022 by using its 2022 IRP filing instead.

26

6

• Next Steps: The CPUC will review revised 2019 RPS Procurement Plans filed by retail sellers in January and make a determination on whether to approve them.

In 2020, the Energy Division is developing a proposal (potentially including workshops or working groups) on integrating the IRP and RPS Procurement Plan filings, but the possibility of combining these filings will not occur prior to 2022, per D.19-12-042.

• Additional Information: EnerCal’s Petition for Modification of D.19-12-042 (January 7, 2020); D.19-12-042 on 2019 RPS Procurement Plans (December 30, 2019); D.19-09-043 on ELCC modeling (September 26, 2019); D.19-09-007 on new CCAs’ 2018 RPS Procurement Plans (September 18, 2019); D.19-08-007 on RPS enforcement actions (August 7, 2019); D.19-06-023 on implementing SB 100 (May 22, 2019); Ruling extending procedural schedule (May 7, 2019); Ruling identifying issues, schedule and 2019 RPS Procurement Plan requirements (April 19, 2019); D.19-02-007 (February 28, 2019); Scoping Ruling (November 9, 2018); Docket No. R.18-07-003.

Investigation of PG&E Bankruptcy Plan

On January 16, 2020, PG&E filed a Motion to modify the procedural schedule, which the ALJ granted in part. On January 23, 2020, the Ad Hoc Committee of Senior Unsecured Noteholders of PG&E (AHC) filed a Motion to withdraw from the proceeding following an agreement it reached with PG&E to support its reorganization plan. The ALJ issued a Ruling granting in part the Motion on January 30, 2020. On January 31, 2020, PG&E filed Notice of its amended reorganization plan with supporting testimony. On February 2, 2020, a wildfire victim (Will Abrams) again requested evidentiary and public participation hearings.

• Background: On September 9, 2019, PG&E filed a proposed plan of reorganization in the United States Bankruptcy Court. A subsequent Ruling of the Bankruptcy Court terminated PG&E’s exclusive right to file a plan of reorganization and permitted the filing of an alternative plan (characterized as a “hostile takeover” by PG&E) proposed by the AHC. Under AB 1054, in order for PG&E to be eligible to participate in the Wildfire Fund, its plan must be “neutral, on average, to ratepayers.” The case will address regulatory review and approval of the plan, in particular the questions surrounding whether the plan meets the requirements AB 1054 imposes for PG&E to participate in the newly established Wildfire Fund, which is encumbered by a June 30, 2020 deadline. This proceeding will consider the ratemaking implications of the proposed plan and settlement agreement, whether the plan satisfactorily resolves claims for monetary fines of penalties for PG&E's pre-petition conduct, whether to approve the governance structure of the utility and the appropriate disposition of potential changes to PG&E's corporate structure and authorization to operate, whether to make any other approvals related to the confirmation and implementation of the plan, and any other findings necessary to approve a proposed settlement, including but not limited to whether doing so is in the public interest.

PG&E’s reorganization plan would result in a $13.5 billion Fire Victim Trust and a $11 billion settlement with insurance claim holders and companies. The Fire Victim Trust will be funded through $6.75 billion in cash, and $6.75 billion in stock of reorganized PG&E Corp., representing at least a 20.9% share ownership of the reorganized PG&E Corp. Notably, tort claimants of PG&E have shifted their support from the plan of the Ad Hoc Committee of Senior Unsecured Noteholders of PG&E to the amended plan proposed by PG&E.

• Details: On January 22, PG&E announced that it had reached an agreement with AHC regarding its reorganization plan. This agreement was approved by the Bankruptcy Court on February 4, 2020. The Restructuring Support Agreement executed by PG&E and AHC required AHC to file motions for leave to withdraw all filings submitted in any proceeding before the CPUC involving PG&E and cease participation in any proceeding before the CPUC involving the PG&E. Accordingly, AHC filed motions to withdraw from various proceedings, including I.19-09-016. The ALJ subsequently issued a Ruling granting in part AHC’s Motion, clarifying that AHC pleadings in this proceeding that have been accepted for filing will remain in the record of this proceeding and

27

7

not withdrawn. AHC documents that have been served but not filed are not part of the record, but remain publicly available. AHC witnesses will not be subject to cross-examination.

PG&E’s amended reorganization plan now addresses the claims of holders of utility prepetition funded debt, separately classifies Ghost Ship Fire Claims from other Fire Claims (i.e., rather than channeling them through the Fire Victim Trust), clarifies that all accrued and unpaid payments as of the Effective Date that are due under the Debtors’ Employee Benefit Plans will be paid on or as soon as practicable after the Effective Date, and incorporates agreements with IBEW Local 1245.

PG&E, saying it has “moved too far from our customers,” now proposes as part of its reorganization plan to create local operating regions, as well as expanding its enterprise and risk management program, adding a new Chief Risk Officer and Chief Safety Officer, taking aggressive action to reduce the number of customers affected by PSPS de-energization events. PG&E requests that the CPUC rule in Docket No. I.15-08-019 that PG&E will not be forced to sell the gas business, to eliminate the holding company, or to municipalize and that the Commission will not institute a review of or make modifications to its certificate of public convenience and necessity

• Analysis: This proceeding will allow the CPUC to approve a restructuring plan for PG&E, which ultimately must secure approval for the plan by the federal Bankruptcy Court. The express exclusion of municipalization issues from the scope of the proceeding has implications for VCE and its bid to PG&E to purchase the transmission and distribution assets of PG&E as part of PG&E’s restructuring. The stock component of the amended reorganization plan could align tort claimants with PG&E in ways that are detrimental to VCE’s bid for municipalization and other interests as well. VCE is a party to this proceeding.

• Next Steps: Reply testimony is now due February 14, 2020. Evidentiary hearings are scheduled for February 19-28, 2020. Opening and reply briefs, respectively, are due March 13, 2020, and March 20, 2020. A PD on financial issues is targeted for April 2020. The CPUC intends to complete the proceeding sufficiently in advance of the June 30, 2020 deadline in order to allow the bankruptcy court sufficient time to address and approve any changes to the plan that result from CPUC directives.

• Additional Information: PG&E Notice of Amended Plan of Reorganization and Testimony (January 31, 2019); Ruling granting in part AHC motion to withdraw (January 30, 2020); Ruling modifying procedural schedule (January 16, 2020); Ruling on Section 854 (November 27, 2019); Scoping Memo and Ruling (November 14, 2019); PG&E Amended Plan (November 5, 2019); Order Instituting Investigation (October 4, 2019); Docket No. I.19-09-016.

Investigation into PG&E Violations Related to Wildfires

On January 10, 2020, PG&E filed a response to an ALJ Ruling requesting more information on the implications of the Settlement Agreement. On January 16, 2020, parties filed comments on the proposed Settlement Agreement. On January 21, 2020, the ALJ issued a Ruling canceling the dates for the evidentiary hearing and briefing in light of the Settlement Agreement. On January 23, 2020, the AHC filed a Motion to withdraw from the proceeding following an agreement it reached with PG&E to support its reorganization plan. On January 31, 2020, parties filed reply comments on the Settlement Agreement.

• Background: The CPUC opened this formal investigation to determine whether PG&E violated any laws, rules, or other applicable requirements pertaining to the maintenance and operation of electric facilities involved in igniting fires in its service territory in 2017. SED issued a Fire Report on June 13, 2019 that found deficiencies in PG&E’s vegetation management practices and procedures and equipment operations in severe conditions. CAL FIRE also found that PG&E’s electrical facilities ignited all but one of the fires addressed in this investigation. This investigation addresses fire incidents from the October 2017 Fire Siege investigated by SED and will determine whether PG&E’s practices have been unsafe and in violation of the law. This investigation orders PG&E to take immediate corrective actions to come into compliance with

28

8

CPUC requirements. The scope of the proceeding includes violations of law by PG&E with respect to the 2017 and 2018 wildfires, including the 2017 Tubbs Fire and the 2018 Camp Fire, what penalties should be assessed, what remedies or corrective actions should occur, and what if any systemic issues contributed to the ignition of the wildfires.

The terms of the Settlement Agreement specify that PG&E’s shareholders are on the hook for $1.675 billion in financial obligations as a result of numerous wildfires its equipment played a role in sparking in 2017 and 2018. Specifically, PG&E would not be permitted seek rate recovery of wildfire-related expenses and capital expenditures totaling $1.625 billion. In addition, PG&E would be required to spend $50 million in shareholder-provided settlement funds on specified System Enhancement Initiatives.

• Details: In comments filed January 16, 2020, the City and County of San Francisco requested the settlement be modified to require the PG&E serve its Quarterly Electric Maintenance reports to local governments in its service territory that request them and to post them on its website and to provide locational information in an easier to understand format.

• Analysis: This investigation could result in a large penalty against PG&E and require additional corrective actions to mitigate future wildfire risk, potentially impacting the quality of service experienced by VCE customers and costs paid by VCE and other distribution customers. Monetary penalties would ultimately be handled in the Bankruptcy Court. Prepetition liabilities must be resolved in this proceeding so that PG&E can emerge from bankruptcy within the time frame provided in AB 1054 (i.e. June 30, 2020).

• Next Steps: TBD.

• Additional Information: Ruling modifying procedural schedule (January 21, 2020); Joint Motion for Approval of Settlement Agreement (December 17, 2019); Ruling amending scope (December 5, 2019); Report on Camp Fire (November 26, 2019; Note: Large File, 259 MB); Ruling granting extension of proceeding schedule (November 25, 2019); Amended Scoping Memo and Ruling (October 28, 2019); GO 95 Rule 31.1; GO 95 Rule 35; GO 95 Rule 38; Order Instituting Investigation (June 27, 2019); Docket No. I.19-06-015.

IRP Rulemaking

Parties filed reply comments on the ALJ’s Ruling on the proposed Reference System Portfolio on January 6, 2020. On January 24, 2020, the ALJ issued a Ruling allowing LSEs to file updated load forecasts out to 2030. On January 24, 2020, GenOn Holdings and the City of Oxnard filed a Petition for Modification of D.19-11-016. On January 31, 2020, the ALJ extended the deadlines established in the January 24, 2020, Ruling, as well as notified parties that the IRP filing deadline would be extended to July 1, 2020. On February 3, 2020, a workshop on the modified cost allocation for backstop procurement was held.

• Background: In the CPUC’s IRP process, the RSP is essentially a proposed statewide IRP portfolio that sets a statewide benchmark for later IRPs filed by individual LSEs. The CPUC ultimately adopts a Preferred System Portfolio (PSP) to be used in statewide planning and future procurement. In May 2019, the CPUC issued D.19-04-040, which rejected an aggregation of each of the LSEs’ IRPs (the Hybrid Conforming Portfolio) as the statewide PSP, adopting instead a modified version of the Reference System Plan adopted in D.18-02-018 as its PSP. D.19-04-040 opened a new "procurement track" of the proceeding to determine how LSEs are to procure resources to satisfy the PSP by 2030.

D.19-11-016 recommends meeting the potential RA capacity shortage identified through two tranches. Tranche 1 consists of a recommendation that the state Water Resources Control Board (Water Board) extend the retirement dates for several existing generation facilities that use once-through cooling (OTC) systems (~3,750 MW of capacity slated to retire December 31, 2020). Tranche 2 consists of a mandatory procurement of 3,300 MW of additional capacity from resources incremental to baseline capacity included in the 2022 PSP. The procurement obligation applies to apply to all LSEs, including VCE. At least 50% of resources must be on-line by August

29

9

1, 2021, 75% by August 1, 2022, and 100% by August 1, 2023. VCE’s incremental system RA procurement requirements for these respective deadlines are 6.3 MW, 9.4 MW, and 12.6 MW. Contracts for new resources must generally be for at least 10 years but energy efficiency resources are allowed under 5 year contracts. Contracts for existing resources must be for at least 3 years.

The November Ruling requested comments on the proposed RSP that would be used for LSE IRP filings due May 1, 2020. Specifically, the Ruling requested comments on the details of the modeling used to produce the RSP (e.g., assumptions, scenarios, sensitivity analyses) as well as the results of the modeling, various concerns that those results could raise and potential actions, and the process for aggregating individual LSE IRPs to form the basis for the ultimate statewide PSP. Of note, Staff added a 5 GW import constraint into the model for all hours when gross electric demand is higher than the 95th percentile. The incremental resource buildout under the default modeling scenario includes 2,837 MW of wind, 11,774 MW of solar, 11,384 MW of battery storage, and 222 MW of load shed demand response.

• Details: In D.19-11-016, the CPUC recommended that the compliance deadline for GenOn’s Ormond Beach Generating Station under California’s Once-Through Cooling Policy be extended for one year. GenOn Holdings and the City of Oxnard have reached an agreement that would resolve previous concerns about extending the life of this facility, and now request modification of the decision to recommend the extension last for three years (through December 31, 2023).

The ALJ’s rulings allow for updated load forecast filings for the 2021-2030 time period for non-IOU LSEs wanting to update their load forecasts from the 2019 Integrated Energy Policy Report, as well as a two-month extension of time for LSEs to file their next IRP.

CalCCA’s comments and reply comments indicate support the adoption of an RSP that will achieve the state’s GHG reduction goals and state that the RPS does not over-rely on solar and storage resources. CalCCA was critical of the SERVM model, including constraints used on imports, and recommended the CPUC replace it for the next IRP cycle, as well as provide greater flexibility in the aggregation process.

• Analysis: The procurement track of this proceeding could potentially diminish VCE’s authority and control over its resource procurement decisions, although the scope of centralized procurement is now limited to establishing a procurement backstop mechanism and procurement of resources requiring collective action. Any changes to D.19-11-016 in response to the three applications for rehearing could change the requirement that VCE procure an additional 12.6 MW of incremental procurement over the baseline. With respect to the proposed 2020 RSP, the proceeding is now considering modeling assumptions and outputs that could further impact VCE’s 2020 IRP requirements.

• Next Steps: Comments including updated load forecasts and reply comments, respectively, are now due February 28 and March 13, 2020.

A Proposed Decision on 2019 Reference System Portfolio and Filing Requirements, with final templates posted to the CPUC website, is anticipated in February 2020.

A progress report on procurement activities stemming from D.19-11-016 is due February 15, 2020. LSEs must also provide progress information and an attestation in their 2020 IRP filings that are now due July 1, 2020, including a list of projects, capacities, online dates, demonstration of incrementality to the baseline, and a description of how they have addressed pollutants in disadvantaged communities. All LSEs must provide electricity resource contract information on May 1 every year (moved to July 1 in 2020).

• Additional Information: Ruling allowing updated load forecasts (January 24, 2020); Protect Our Communities Application for Rehearing of D.19-11-016 (December 13, 2019); GenOn Holdings Application for Rehearing of D.19-11-016 (December 13, 2019); Joint Application for Rehearing of D. 19-11-016(December 5, 2019); List of Baseline Resources (December 2, 2019); E-Mail Ruling extending RSP comments deadlines (November 19, 2019); D.19-11-016 (November 13, 2019); Ruling requesting comments on RSP (November 6, 2019); Ruling initiating procurement track

30

10

(June 20, 2019); D.19-04-040 on 2018 IRPs and 2020 IRP requirements (May 1, 2019); Docket No. R.16-02-007.

RA Rulemaking (2021-2022)

On January 22, 2020, Commissioner Randolph issued a Scoping Memo and Ruling.

• Background: See the RA Rulemaking (2019-2020) proceeding below for additional background information on current RA issues. The preliminary scope of this proceeding includes Local and Flexible RA requirements beginning in 2021, structural program changes, and program refinements. Specifically, it will determine local RA requirements for the 2021-2023 compliance years, including the CAISO's local capacity study, local area aggregation, local RA waivers or adjustments, and the reliability criteria targeted through procurement obligations. It will also establish Flexible RA requirements for the 2021 and 2022 compliance years.

• Details: The scoping memo divides the proceeding into four tracks, with Tracks 1 and 2 :

o Track 1 considers revisions to the RA import rules.

o Track 2 considers System and Flexible RA requirements for 2021 and Local RA requirements for 2021-2023. It also considers time-sensitive refinements to the RA program, including modifications to the maximum cumulative capacity (MCC) buckets to address increasing reliance on use-limited resources to meet reliability and needs; using a working group process to consider qualifying capacity counting conventions and requirements for hydro resources, hybrid resources, and third-party demand response resources; re-aggregation of the “PG&E Other” area; and changes to the existing penalty structure and waiver process to address potential market power.

o Track 3 examines the broader RA capacity structure to address energy attributes and hourly capacity requirements, given the increasing penetration of use-limited resources, greater reliance on preferred resources, rolling off of a significant amount of long-term tolling contracts held by utilities, and material increases in energy and capacity prices experienced in California over the past years.

o Track 4 will consider the 2022 program year requirements for System and Flexible RA, and the 2022-2024 Local RA requirements.

• Analysis: Regulatory developments under consideration in this proceeding that may impact VCE’s capacity procurement obligations include the consideration of hourly capacity requirements in light of the increasing penetration of use-limited resources; modifications to maximum cumulative capacity buckets and whether the RA program should cap use-limited and preferred resources; whether the CPUC should cap imports; the potential expansion of multi-year local forward RA to system or flexible resources; RA penalties and waivers; counting conventions for hydro, hybrid resources, and DR resources; and Marginal ELCC counting conventions for solar, wind and hybrid resources.

• Next Steps: In Track 1, Energy Division will issue a report on import RA issues in early February, followed by a workshop on February 14, 2020. The workshop report and/or proposals are due February 28, 2020, and comments on workshop report and/or proposals are due March 6, 2020.

In Track 2, Energy Division will file a proposal on MCC buckets on February 7, and both Energy Division and other Party proposals on other Track 2 issues are due February 21. A workshop, followed by opportunities for comments and reply comments, will occur in March. A working group on Counting Conventions will meet in February and file its report on March 2, followed by opportunities for comments and reply comments, and then a proposed decision issued in May 2020. Flexible and local RA issues will be addressed in April-May, kicking off with the CAISO draft 2021 LCR Report filed on April 1.

In Track 3, proposals from parties and Energy Division are due July 10.

31

11

The schedule and scope of issues for Track 4 will be established in a later Scoping Memo.

• Additional Information: Scoping Memo and Ruling (January 22, 2020); Order Instituting Rulemaking (November 13, 2019); Docket No. R.19-11-009.

RA Rulemaking (2019-2020)

On January 14, 2020, the Assigned Commissioner issued a Ruling providing Energy Division’s State of the Market Resource Adequacy Report, revised to include October-December 2019 data. On January 17, 2020, the CPUC issued D.20-01-004 addressing a September 2019 Motion from a group of solar and storage parties to establish the RA qualifying capacity (QC) of hybrid resources (i.e., storage paired renewables) for both in front of the meter (IFOM) and behind the meter (BTM) configurations.

• Background: This proceeding has three tracks, and is currently focused on remaining central buyer issues in Track 2. Track 1 addressed 2019 local and flexible RA capacity obligations and several near-term refinements to the RA program and is closed.

In Track 2, the CPUC adopted multi-year Local RA requirements and declined to adopt a central buyer mechanism (D.19-02-022 issued March 4, 2019). A pending settlement agreement, filed by CalCCA among other parties (but not PG&E), would create an RA Central Procurement Entity ("RA-CPE"), unidentified in the Settlement Agreement, to procure residual collective RA for all CPUC-jurisdictional LSEs that is not met by individual LSEs. Individual LSEs may choose to procure their share of the collective RA requirement, or they may allow the RA-CPE to procure their share on default. Costs will be allocated ex post based on cost causation principles. The Commission has not taken action on the proposed settlement.

In Track 3, D.19-06-026 adopted CAISO’s recommended 2020-2022 Local Capacity Requirements and CAISO’s 2020 Flexible Capacity Requirements and made no changes to the System capacity requirements. It established an IOU load data sharing requirement, whereby each non-IOU LSE (e.g., CCAs) will annually request data by January 15 and the IOU will be required to provide it by March 1. It also adopted a “Binding Load Forecast” process such that an LSE’s initial load forecast (with CEC load migration and plausibility adjustments based on certain threshold amounts and revisions taken into account) becoming a binding obligation of that LSE, regardless of additional changes in an LSE’s implementation to new customers.

• Details: The updated RA report finds there is currently sufficient capacity on the system, and compliance with RA requirements is possible, but note that the market is tight and that it is expected to continue to tighten. It observed that 20 of the 42 Commission-jurisdictional LSEs – PG&E, SCE, 9 CCAs and 9 ESPs – submitted local waiver requests due to their inability to procure sufficient capacity to meet their 2020- 2022 year ahead local RA requirements in one or more local areas

D.20-01-004 adopted an interim valuation for IFOM resources that have operational restrictions (e.g., a charging restriction), defining QC as the greater of the ELCC-based QC of the intermittent resource, or the QC of the co-located storage device. It found that it would be premature to adopt a QC methodology for BTM resources because these resources currently receive credit as DR and can continue to do so, and creating a QC methodology would require significant revisions the RA program. For hybrid resources without operational restrictions, it found that it is unnecessary to develop a QC methodology because each resource can obtain an individual CAISO resource ID and receive individual QC values. The CPUC will work to refine the method(s) for counting hybrid resources in 2021-2022 RA rulemaking (R.19-11-009).

• Analysis: This proceeding affects VCE’s Local RA compliance obligations beginning in 2020, for the first time requiring procurement over a three-year period instead of an annual period. The most significant impacts of D.19-10-021 will be felt by CCAs with unspecified imports currently under contract.

32

12

The settlement agreement, if approved by the CPUC, would resolve central buyer issues other than the identity of the central buyer. Moving to a central procurement entity as proposed in the settlement agreement would impact VCE’s RA procurement and compliance, including eliminating the need for monthly RA showings and associated penalties and/or waiver requests from individual LSEs. VCE could choose to procure its share of RA or allow that to be done by the central buyer and pay for its share of such procurement.

CalCCA’s Petition for Modification, if granted, would provide CCAs with the potential for a waiver of system and flexible RA requirements (in addition to the existing waiver process for local RA). The disaggregation of the PG&E Other Zone is likely to complicate VCE’s RA procurement efforts, so if the PG&E PFM is approved by the CPUC, it could provide alternative compliance options to VCE and additional flexibility.

• Next Steps: The timeline for a final decision regarding the central buyer is unclear.

• Additional Information: D.20-01-004 on qualifying capacity value of hybrid resources (January 17, 2020); Ruling on Energy Division’s RA State of the Market Report (January 14, 2020); D.19-12-064 granting motion for stay of D.19-10-021 (December 23, 2019); Powerex Application for Rehearing of D.19-10-021 (November 18, 2019); CAISO Application for Rehearing of D.19-10-021 (November 18, 2019); Petition for Modification of D.19-06-026 by CalCCA (October 30, 2019); CalCCA Application for Rehearing of D.19-10-021 (October 24, 2019); D.19-10-021 affirming RA import rules (October 17, 2019); D.19-09-054 extending statutory deadline (September 26, 2019); PG&E PFM regarding PG&E Other disaggregation (September 11, 2019); Ruling issuing RA State of the Market (September 3, 2019); Joint Motion to adopt a settlement agreement for a residual central procurement entity (August 30, 2019); D.19-06-026 adopting local and flexible capacity requirements (July 5, 2019); Docket No. R.17-09-020.

PG&E’s Phase 1 GRC

On January 6, 2020, the ALJs issued a Ruling granting a PG&E motion for oral argument. On January 24, 2020, the AHC filed a Motion to withdraw from the proceeding following an agreement it reached with PG&E to support its reorganization plan. On January 27, 2020, PG&E filed a Motion requesting official notice of information in its 10-K Annual Reports showing its total number of electric and gas customers for 2013-2018. Parties filed comments and reply comments, respectively, on January 21, 2020, and February 5, 2020, on the proposed Settlement Agreement. Parties also filed reply briefs on disputed issues outside of the Settlement Agreement on January 27, 2020.

• Background: PG&E’s three-year GRC covers the 2020-2022 period. For 2020, it has requested an additional $1.058 billion (from $8.518 billion to $9.576 billion), or a 12.4% increase over its 2019 authorized revenue requirement, comprised of increases related to its gas distribution ($2.097 billion total, or a $134 million increase), electric distribution ($5.113 billion total, or a $749 million increase), and generation ($2.366 billion total, or a $175 million increase) services. If approved, it would increase a typical monthly residential electric (500 kWh) and natural gas (34 therms) customer bill by $10.57, or 6.4%, comprised of an electric bill increase of $8.73 and a gas bill increase of $1.84. For 2021 and 2022, PG&E requested total increases of $454 million and $486 million, respectively. PGE’s GRC does not include a request for cost recovery related to 2017 and 2018 wildfire liabilities.

The Settlement Agreement, filed December 30, 2019, would result in an increase in PG&E’s 2020 revenue requirement of $575 million (i.e., $483 million lower than PG&E’s original request), with additional increases of $318 million, or 3.5% in 2021, and $367 million, or 3.9%, in 2022. The Settlement Agreement would result in PG&E withdrawing its proposal for a non-bypassable charge related to its hydroelectric facilities. It would require PG&E to develop new and enhanced reporting to provide increased visibility into the work it performed. It also provides for PG&E’s ability to purchase insurance coverage up to $1.4 billion to protect against wildfire risk and other liabilities, reflected in PG&E’s forecast as a cost of $307 million. The consolidated 2020 electric and gas bill impact would be 3.4%.

33

13

• Details: N/A.

• Analysis: PG&E’s GRC proposals include shifting substantial costs associated with its hydroelectric generation from its generation rates (applicable only to its bundled customers) into a non-bypassable charge affecting all of its distribution customers, including VCE customers, which would negatively affect the competitiveness of VCE’s rates relative to PG&E’s. However, that proposal would be withdrawn if the Settlement Agreement is approved.

• Next Steps: The ALJs are expected to issue a proposed decision.

• Additional Information: PG&E Motion for Official Notice of Facts (January 27, 2020); Joint Motion for Settlement Agreement (January 14, 2020); E-Mail Ruling granting oral argument (January 6, 2020); E-Mail Ruling modifying procedural schedule (December 2, 2019); E-Mail Ruling suspending briefing deadlines (November 25, 2019); D.19-11-014 (November 14, 2019); Ruling setting public participation hearings (May 7, 2019); Scoping Memo and Ruling (March 8, 2019); Joint CCAs’ Protest (January 17, 2019); Application and PG&E GRC Website (December 13, 2018); Docket No. A.18-12-009.

PG&E’s Phase 2 GRC

On January 10, 2020, parties including a group of northern California CCAs protested PG&E’s Phase 2 GRC application. PG&E filed its response on January 21, 2020. A prehearing conference was held January 23, 2020.

• Background: PG&E’s 2020 Phase 2 General Rate Case (GRC) addresses marginal cost, revenue allocation and rate design issues covering the next three years. PG&E’s pending Phase 1 GRC (filed in December 2018 via a separate proceeding) will set the revenue requirement that will carry through to the rates ultimately adopted in this proceeding.

In this proceeding, PG&E seeks modifications to its rates for distribution, generation, and its public purpose program (PPP) non-bypassable charge. PG&E proposes to implement a plan to move all customer classes to their full cost of service over a six-year period (the first three years of which are covered by this GRC Phase 2) via incremental annual steps. PG&E proposes to use marginal costs for purposes of revenue allocation and to adjust distribution one-sixth of the way to full cost of service each year over a six-year transition period.

Of note, PG&E is proposing changes to the DA/CCA event-based fees that were not updated in the 2017 Phase 2 GRC proceeding. In addition, PG&E proposes to remove the PCIA revenue from bundled generation revenue and allocate that cost separately to bundled customers, collecting the PCIA from bundled customers on a non-time differentiated, per-kWh basis (i.e., the same way it is collected from DA/CCA customers). PG&E will continue to display the PCIA with other generation charges on customer bills, but will unbundle the PCIA as part of unbundled charges in each rate schedule.

• Details: N/A.

• Analysis: This proceeding will impact the transparency between a bundled and unbundled customer’s bills and the allocation of PG&E’s revenues requirements among Valley’s different rate classes. It will also affect distribution and PPP charges paid by VCE customers to PG&E. Further, PG&E includes a cost-of-service study the purpose of which is to establish the groundwork for separating net metering customers into a separate customer class in the utility’s next rate case. If PG&E’s proposed CCA fee revisions are adopted, it will increase the cost VCE pays to PG&E for various services.

• Next Steps: The ALJ is expected to issue a Scoping Memo and Ruling next. PG&E’s proposed schedule anticipates a final CPUC Decision in this proceeding in August 2021, with rates not effective until November 2021.

34

14

• Additional Information: E-mail Ruling extending Protest deadline (December 3, 2019); Application, Exhibit (PG&E-1): Overview and Policy, Exhibit (PG&E-2): Cost of Service, Exhibit (PG&E-3): Revenue Allocation, Rate Design and Rate Programs, and Exhibit (PG&E-4): Appendices (November 22, 2019); Docket No. A.19-11-019.

PCIA Rulemaking

Comments and reply comments on Working Group 2’s (Prepayment) Final Report were filed by parties on January 6, 2020, and January 13, 2020, respectively. On January 15, 2020, and then again on January 22, 2020, the ALJ issued rulings modifying the procedural schedule to push back the date of Working Group 3’s (Portfolio Optimization and Cost Reduction and Allocation and Auction) report and opportunities for comments and replies. On January 21, 2020, the CPUC issued D.20-01-030, which modifies D.18-10-019 (October 2018) and denies requests for its rehearing.

• Background: D.18-10-019 was issued on October 19, 2018, in Phase 1 of this proceeding and left the current PCIA in place, maintained the current brown power index, and adopted revised inputs to the benchmarks used to calculate the PCIA for energy RPS-eligible resources and resource adequacy capacity.

Phase 2 relies primarily on a working group process to further develop a number of PCIA-related proposals. Three workgroups examined three issues: (1) issues with the highest priority: Benchmark True-Up and Other Benchmarking Issues; (2) issues to be resolved in early 2020: Prepayment; and (3) issues to be resolved by mid-2020: Portfolio Optimization and Cost Reduction, Allocation and Auction.

• Details: D.20-01-030 denies requests for rehearing of D.18-10-019, which were filed by CalCCA, among other parties. Instead, the CPUC only corrects some citations, adds two conclusions of law, and clarifies its statutory authority to require reporting information of ESPs.

• Analysis: D.19-10-001 impacted the PCIA VCE’s customers pay in 2020. PG&E’s implementation of the PCIA cap via the ERRA forecast proceeding and Advice Letter 5624-E would mean that some customer classes could pay an increase in the PCIA that is slightly more than 0.5 cent per kWh and some customer classes could pay slightly less than the 0.5 cent per kWh increase. Advice Letter 5624-E also means the PCIA could increase mid-year if the amount of revenues that would have been collected but for the cap exceeds a certain trigger and threshold amount in what PG&E has called the PCIA Undercollection Balancing Account (PUBA). The PUBA trigger is an outgrowth of D.18-10-019. Phase 2 of this proceeding will further affect the PCIA paid by VCE’s customers in future years, as well as other important PCIA issues that could impact CCAs such as prepayment.

• Next Steps: A separate PD is anticipated to be issued in early Winter 2019 on the remaining Working Group 1 issues.

Working Group 3 is now directed to file its report by February 21, 2020, with opening and reply comments, respectively, due March 13 and 27, 2020. Motions for an evidentiary hearing are due April 3, 2020, and a proposed decision is expected in Q3 2020.

• Additional Information: Ruling modifying procedural schedule for working group 3 (January 22, 2020); D.20-01-030 denying rehearing of D.18-10-019 as modified (January 21, 2020); Ruling modifying procedural schedule (January 15, 2020); Ruling modifying procedural schedule (December 18, 2019); Working Group 2 Final Report (December 9, 2019); AL 5705-E (December 2, 2019); D.19-10-001 (October 17, 2019); AL 5624-E establishing PCIA Undercollection Balancing Account and Trigger Mechanism (August 30, 2019). Phase 2 Scoping Memo and Ruling (February 1, 2019); D.18-10-019 Track 2 Decisions adopting the Alternate Proposed Decision (October 19, 2018); D.18-09-013 Track 1 Decision approving PG&E Settlement Agreement (September 20, 2018); Docket No. R.17-06-026.

35

15

Direct Access Rulemaking

On January 8, 2020, a workshop was held on an Energy Division study that will inform the CPUC’s recommendations to the Legislature on further expanding Direct Access (DA) for nonresidential customers in California. Parties submitted informal comments and reply comments on January 21, 2020, and January 27, 2020, respectively.

• Background: Phase 1 issues were resolved on May 30, 2019. For Phase 2 of this proceeding, the CPUC will address the SB 237 mandate requiring the CPUC to, by June 1, 2020, provide recommendations to the Legislature on “implementing a further direct transactions reopening schedule, including, but not limited to, the phase-in period over which further direct transactions shall occur for all remaining nonresidential customer accounts in each electrical corporation’s service territory.”

• Details: The January 8 workshop included discussions of the impacts of nonresidential DA expansion on resource adequacy, RPS compliance, GHG emissions, emissions of criteria pollutants, integrated resource planning, cost shifting, and consumer protections.

• Analysis: This proceeding will impact the CPUC’s recommendations to the Legislature regarding the potential future expansion of DA in California, including a potential lifting of the existing cap on nonresidential DA transactions altogether. Further expansion of DA in California could result in non-residential customer departures from VCE and make it more difficult for VCE to forecast load and conduct resource planning. CalCCA has argued that further expansion of nonresidential DA is likely to adversely impact attainment of the state’s environmental and reliability goals, and will result in cost-shifting to both bundled and CCA customers.

• Next Steps: A final study will be published March 9, 2020, with comments and reply comments on the final recommendations due March 30, 2020 and April 9, 2020, respectively. A proposed decision is anticipated for May 22, 2020.

• Additional Information: Amended Scoping Memo and Ruling adding issues and a schedule for Phase 2 (December 19, 2019); Docket No. R.19-03-009; see also SB 237.

Wildfire Cost Recovery Methodology Rulemaking

No updates this month. An August 7, 2019, PG&E Application for Rehearing remains pending regarding the CPUC’s recent Decision establishing criteria and a methodology for wildfire cost recovery, which has been referred to as a "Stress Test" for determining how much of wildfire liability costs that utilities can afford to pay (D.19-06-027).

• Background: SB 901 requires the CPUC to determine, when considering cost recovery associated with 2017 California wildfires, that the utility’s rates and charges are “just and reasonable.” In addition, and notwithstanding this basic rule, the CPUC must “consider the electrical corporation’s financial status and determine the maximum amount the corporation can pay without harming ratepayers or materially impacting its ability to provide adequate and safe service.”

D.19-06-027 found that the Stress Test cannot be applied to a utility that has filed for Chapter 11 bankruptcy protection (i.e., PG&E) because under those circumstances the CPUC cannot determine essential components of the utility's financial status. In that instance, a reorganization plan will inevitably address all pre-petition debts, include 2017 wildfire costs, as part of the bankruptcy process. The framework proposed for adoption in the PD is based on an April 2019 Staff Proposal, with some modifications. The framework requires a utility to pay the greatest amount of costs while maintaining an investment grade rating. It also requires utilities to propose ratepayer protection measures in Stress Test applications and establishes two options for doing so.

PG&E’s application for rehearing challenges the CPUC’s prohibition on applying the Stress Test to utilities like itself that have filed for Chapter 11 bankruptcy. PG&E’s rationale is that SB 901

36

16

requires the CPUC to determine that the stress test methodology to be applied to all IOUs. Several parties filed responses to PG&E’s application for rehearing disagreeing with PG&E.

• Details: N/A.

• Analysis: This proceeding established the methodology the CPUC will use to determine, in a separate proceeding, the specific costs that the IOUs (other than PG&E) may recover associated with 2017 or future wildfires.

• Next Steps: The only matter remaining to be resolved in this proceeding is PG&E’s application for rehearing. This proceeding is otherwise closed.

• Additional Information: PG&E Application for Rehearing (August 7, 2019); D.19-06-027 (July 8, 2019); Assigned Commissioner’s Ruling releasing Staff Proposal (April 5, 2019); Scoping Memo and Ruling (March 29, 2019); Order Instituting Rulemaking (January 18, 2019); Docket No. R.19-01-006. See also SB 901, enacted September 21, 2018.

Investigation into PG&E’s Organization, Culture and Governance (Safety OII)

No significant updates this month. On January 24, 2020, the AHC filed a Motion to withdraw from the proceeding following an agreement it reached with PG&E to support its reorganization plan.

• Background: On December 21, 2018, the CPUC issued a Scoping Memo opening the next phase of an ongoing investigation into whether PG&E’s organizational culture and governance prioritize safety. This current phase of the proceeding is considering alternatives to current management and operational structures for providing electric and natural gas in Northern California.

In June 2019, D.19-06-008 ordered PG&E to report on the safety experience and qualifications of the PG&E Board of Directors and establishes an advisory panel on corporate governance. The brief Decision required PG&E to provide a variety of information on each PG&E and PG&E Corporation Board member involving safety training, related work experience, previous positions held, and current professional commitments.

• Details: N/A.

• Analysis: This proceeding could have a range of possible impacts on CCAs within PG&E’s territory and their customers, given the broad issues under investigation pertaining to PG&E’s corporate structure and governance.

• Next Steps: TBD.

• Additional Information: Ruling on proposals to improve PG&E safety culture (June 18, 2019); D.19-06-008 directing PG&E to report on safety experience and qualifications of board members (June 18, 2019); Scoping Memo (December 21, 2018); Docket No. I.15-08-019.

Wildfire Fund Non-Bypassable Charge (AB 1054)

No significant updates this month. On January 24, 2020, the AHC filed a Motion to withdraw from the proceeding following an agreement it reached with PG&E to support its reorganization plan.

• Background: This rulemaking implemented AB 1054 and extended a non-bypassable charge on ratepayers to fund the Wildfire Fund. The scope of this proceeding was limited to consideration of whether the CPUC should authorize ratepayer funding of the Wildfire Fund established by AB 1054, enacted in July 2019, via the continuation of an existing non-bypassable charge (Department of Water Resources bond charge) that would have otherwise expired by the end of

37

17

2021. On August 26, 2019, the Bankruptcy Court tentatively granted PG&E’s request to participate in the Wildfire Fund.

D.19-10-056, issued in October 2019, approved the establishment of a non-bypassable charge on IOU customers to provide revenue for the newly established state Wildfire Fund pursuant to 2019 AB 1054. The charge will only be assessed on customers of utilities that participate in the Wildfire Fund (i.e., PG&E, SCE, and SDG&E), and will expire at the end of 2035. The Decision also provides that once a large IOU commits to Wildfire Fund participation, it may not later revoke its participation. The annual revenue requirement for the charge among the large IOUs will total $902.4 million, allocated at $404.6 million for PG&E, $408.2 million for SCE, and $89.6 million for SDG&E. (There is a June 30, 2020, deadline for PG&E to satisfactorily complete its insolvency proceeding under AB 1054, and therefore become eligible to participate in the Wildfire Fund.) The Wildfire Fund NBC will be collected on a $/kWh basis, with the revenue requirement allocated based on each class's share of energy sales. Residential CARE and medical baseline customers are exempt. The Wildfire Fund NBC cannot take effect until the DWR Bond charge sunsets, which may take place as early as the second half of 2020.

• Details: N/A.

• Analysis: This proceeding established a new non-bypassable charge on VCE customers beginning as early as the second half of 2020 to fund the Wildfire Fund under AB 1054. Whether customers in PG&E’s territory will be subject to the charge will be determined only after its Bankruptcy proceeding is complete. D.19-10-056 kept the proceeding open to later consider the annual revenue requirement and sales forecast for the Wildfire Fund non-bypassable charge in 2020.

• Next Steps: The non-bypassable charge will go into effect as early as the second half of 2020.

• Additional Information: D.19-10-056 approving a non-bypassable charge (October 24, 2019); Scoping Memo and Ruling (August 14, 2019); Order Instituting Rulemaking (August 2, 2019); Docket No. R.19-07-017. See also AB 1054.

Other Regulatory Developments

• CPUC Modifies GRC Filing Schedule: The CPUC issued D.20-01-002, changing the timing of

large IOU general rate case (GRC) filings from a three-year to a four-year cycle (Docket No. R.13-11-006). The new GRC application filing deadline will be May 15 (instead of September 1 as it is currently) of the year that is two years prior to the test year. As part of the transition to this new GRC cycle, PG&E will file a combined GRC application in June 2021 (2023 test year). PG&E was also directed to combine its currently-separate GRC and Gas Transmission and Storage rate cases into a single rate case application beginning with its 2020 Risk Assessment and Mitigation Phase (RAMP). The Energy Division will hold a workshop or workshops to explore remaining GRC issues, including GRC Phase 2 scheduling.

• CPUC Approves Changes to SGIP Funding: On January 27, the CPUC issued D.20-01-021 establishing funding and program design for the 2020-2024 SGIP Program. The Decision stems principally from 2018 SB 700, which authorized the CPUC to extend annual SGIP collections by up to five years from 2020-2024, but also addresses 2019 AB 1144 providing for the use of SGIP funding to benefit customers impacted by PSPS events. The PD authorizes funding of $166 million annually from 2020-2024. The total amount of funding is broken down into an 83% allocation for battery storage projects ($675.6 million), a 12% allocation for renewable generation technologies ($98 million), and a 5% allocation for heat pump hot water heaters ($40.7 million).

38

18

Glossary of Acronyms

AB Assembly Bill

AET Annual Electric True-up

ALJ Administrative Law Judge

BTM Behind the Meter

CAISO California Independent System Operator

CAM Cost Allocation Mechanism

CARB California Air Resources Board

CEC California Energy Commission

CPUC California Public Utilities Commission

CTC Competition Transition Charge

DA Direct Access

GRC General Rate Case

ELCC Effective Load Carrying Capacity

ERRA Energy Resource and Recovery Account

IEPR Integrated Energy Policy Report

IFOM In Front of the Meter

IRP Integrated Resource Plan

IOU Investor-Owned Utility

LSE Load-Serving Entity

MCC Maximum Cumulative Capacity

PABA Portfolio Allocation Balancing Account

PD Proposed Decision

PG&E Pacific Gas & Electric

PFM Petition for Modification

PCIA Power Charge Indifference Adjustment

PUBA PCIA Undercollection Balancing Account

QC Qualifying Capacity

RA Resource Adequacy

RDW Rate Design Window

RPS Renewables Portfolio Standard

SCE Southern California Edison

SED Safety and Enforcement Division (CPUC)

SDG&E San Diego Gas & Electric

TCJA Tax Cuts and Jobs Act of 2017

TURN The Utility Reform Network

UOG Utility-Owned Generation

WMP Wildfire Mitigation Plan

WSD Wildfire Safety Division (CPUC)

39

VALLEY CLEAN ENERGY ALLIANCE

Staff Report - Item 9 ____________________________________________________________________________________

TO: VCE Board of Directors FROM: Mitch Sears, Interim General Manager SUBJECT: Recommendation to the Board on AB 1567, SB 378, and SB 804 and SB 917 DATE: February 13, 2020

Recommendation: 1. Support AB 1567. 2. Support SB 378 as amended. 3. Support SB 804 as amended. 4. Support SB 917 in concept.

Background and Analysis On February 5, 2020, the Community Advisory Committee (CAC) received, reviewed and took action in a special meeting supporting the staff recommendations of support positions on the following three (3) bills: 1. AB 1567 (Aguiar-Curry). Organic waste: scoping plan.

Summary: Would, on a before December 31, 2021, require the Strategic Growth Council, in consultation with stakeholders and relevant permitting agencies, to prepare and submit to the Legislature a report that provides a scoping plan for the state to meet its organic waste, climate change, and air quality mandates, goals, and targets and would require the scoping plan to include, among other things, recommendations on policy and funding support for the beneficial reuse of organic waste. This bill proposes that the Strategic growth Council, with input from other departments and agencies, create a scoping plan for the state to meet its organic waste, climate change, and air quality goals, mandates, etc. This scoping plan could include innovative strategies for energy generation from organic waste in Yolo County. Consistent with adopted Board policy relating to time sensitive legislative issues, VCE staff worked with the VCE Board subcommittee to submit a letter supporting AB1567 on January 13, 2020 for the bill’s hearing in the Assembly Natural Resources Committee (ANRC). The ANRC, Assembly Appropriations Committee and Assembly Floor unanimously passed this bill. Staff and the CAC recommend ratification of VCE’s support for this legislation.

40

2

2. SB 378 (Wiener) Electrical corporations: deenergization events: procedures: allocation of costs: reports. Summary: Would require each electrical corporation to annually submit a report to the wildfire Safety Division and, after June 30, 3021, to the Office of Energy Infrastructure Safety, that includes the age, useful life, and condition of the electrical corporation’s equipment, inspection dates, and maintenance records for its equipment, investments to maintain and improve the operation of its transmission and distribution facilities, and an assessment of the current and future fire and safety risk posed by the equipment. Senator Wiener introduced language proposing stricter oversight and penalties regarding PSPS and then amended the bill in January 2020. The amended bill proposes to require greater information sharing by IOU’s with state and local government regarding IOU infrastructure and investments made in the infrastructure; a code of conduct regarding IOU marketing against POU formation/expansion; a code of conduct regarding IOU marketing against microgrids and distributed energy generation; and additional damages due to a PSPS; and a $500,000 per hour per 50,000 customer penalty for an IOU implementing a PSPS. Consistent with adopted Board policy relating to time sensitive legislative issues, VCE staff worked with the VCE Board subcommittee to submit a letter supporting AB1567 on January 13, 2020 for the bill’s hearing in the Senate Energy Committee. Committee amendments removed the two code of conduct provisions, reduced the penalty amount to $250,000 per hour per 50,000 customers and requires a finding by the PUC that the IOU failed to act reasonably and prudently in implement the PSPS. The bill has since passed the Senate Appropriations Committee and passed the Senate Floor on a bipartisan vote. Staff and the CAC recommend ratification of VCE’s support for this legislation. 3. SB 804 (Wiener) Public capital facilities: electric utilities: rate reduction bonds. Summary: The Marks-Roos Local Bond Pooling Act of 1985 authorizes certain joint powers authorities, upon application by a local agency that owns and operates a publicly owned utility, defined to mean certain utilities furnishing water or wastewater service to not less than 25,000 retail customers, to issue rate reduction bonds to finance utility projects, as defined, subject to certain requirements. Under the act, these rate reduction bonds are secured by a pledge of utility project property, and the joint powers authority issuing the bonds may impose on, and collect from, customers of the publicly owned utility a utility project charge to finance the bonds, as provided. The act requires the California Pollution Control Financing Authority, among other things, to review each issuance of rate reduction bonds issued under these provisions. This bill would expand the definition of a publicly owned utility for these purposes to include certain utilities furnishing generation transmission, or distribution electrical service to retail customers and would authorize an authority to issue rate reduction bonds to finance or refinance utility projects for the provision of generation, transmission, or distribution electrical service.

41

3

SB 804 is a bill produced by SF PUC to provide an additional financing tool to the formation of municipal utilities. This proposed legislation would extend the existing authority to use rate reduction bonds to local power agencies throughout California. Existing law allows local public agencies to issue rate reduction bonds to finance various water and wastewater infrastructure projects. Investor-owned electric utilities (IOUs), including PG&E, are also able to take advantage of this financing structure, but his mechanism is not available to public electric utilities. Rate reduction bonds are asset-backed securities that save ratepayers significant dollars when local agencies finance infrastructure through this mechanism in two ways.

1) securitization allows these agencies to qualify bonds for more favorable credit ratings. If a bond receives a favorable AAA rating, instead of a lower rating, the local agency can borrow funds at an interest rate that is well below the rate that would otherwise apply to the agency’s long-term debt, substantially reducing borrowing and benefiting ratepayers.

2) Securitization enables publicly-owned utilities to reduce debit.

Staff and the CAC recommend that the Board support this legislation as consistent with VCE’s adopted principles on establishment of public power options that deliver cost competitive energy to customers. Staff’s Summary The following legislative bill is new and has not been vetted by the CAC; although, it has been discussed by the CAC Legislative/Regulatory Task Group. Staff provides a summary and recommendation below: 4. SB 917 (Wiener) California Consumer Energy and Conservation Financing Authority: eminent domain: Northern California Energy Utility District: Northern California Energy Utility Services. Summary: Would rename the authority the California Consumer Energy and Conservation Financing Authority and would repeal the prohibition upon the authority approving any new program, enterprise, or project, on or after January 1, 2007. The bill would authorize the authority to acquire, by eminent domain, the assets or ownership of an electrical corporation, gas corporation, or public utility that is both an electrical and gas corporation, including any franchise rights, if that corporation has been convicted of one or more felony criminal violations of laws enacted to protect the public safety within 10 years of the date the eminent domain action is commenced. The bill would authorize a local publicly owned energy utility, as defined, to elect to join in the eminent domain action brought by the authority and acquire that portion of the electrical or gas system necessary to provide service within its borders if the local publicly owned energy utility contributes its proportionate share of the compensation paid for the assets or ownership of the public utility. Senator Wiener is proposing a public takeover of PG&E, but this is not the co-op proposal that San Jose Mayor Liccardo has been advocating for and that many local elected officials have endorsed. Sen. Wiener is proposing a public-private partnership similar to the Long Island Power Authority model. The bill would authorize the California Consumer Energy and Conservation Financing Authority to acquire by eminent domain a public utility convicted of a felony within 10 years of the eminent domain proceeding commencing. Local publicly owned energy utilities can join the eminent domain action and

42

4

acquire the portion of the electric/gas system needed to provide service within its borders; the publicly owned utility must contribute its proportionate share of the costs of acquiring the system. The bill would also create the Northern California Energy Utility District, similar in function and power to a municipal utility, and create the Northern California Energy Utility Service, a private public benefit corporation. The district would house the senior management and government/community relations positions to oversee the service, which would house the operating employees. Other highlights from the bill:

- All labor agreements protected - 5 year transition to POU structure - All PGE assets not just electric - Local jurisdictions who already have expressed POU interest can spin off from the bigger entity within one year. - Future POU efforts to be evaluated on case by case basis. - PUC will have no authority over rate setting - CCAs take over primary procurement authority - CCAs have right of first refusal for Provider of Last Resort (POLR)

The CAC has not made a recommendation on this bill. Staff is recommending that the Board support this legislation in concept. Due to its complexity and recent introduction, staff is in the process of studying the details of the proposed legislation.

43

1

VALLEY CLEAN ENERGY ALLIANCE

Staff Report – Item 10

TO: Valley Clean Energy Alliance Board of Directors

FROM: Mitch Sears, Interim General Manager, VCEA

SUBJECT: Customer Enrollment Update (Information)

DATE: February 13, 2020 RECOMMENDATION Receive and review the attached Customer Enrollment update as of February 6, 2020.

44

Item 14 - Enrollment Update

1Status Date: 2/6/20

Davis Woodland Yolo Co Total Ag Commercial Industrial Residential

VCEA customers 25,770 18,831 9,277 53,878 1,748 5,748 5 46,377

Eligible customers 26,957 21,324 11,456 59,737 2,013 6,366 6 51,352

Participation Rate 96% 88% 81% 90% 87% 90% 83% 90%

• There are currently 5,802 NEM customers not included in this table. They will enroll throughout the remainder of 2020.

45

Item 14 - Enrollment Update

2Status Date: 2/6/2046

VALLEY CLEAN ENERGY ALLIANCE

Staff Report – Item 11

TO: Valley Clean Energy Alliance Board of Directors

FROM: Mitch Sears, Interim General Manager

SUBJECT: Community Advisory Committee January 23, 2020 Meeting Summary DATE: February 13, 2020

This report summarizes the Community Advisory Committee’s meeting held on Thursday, January 23, 2020.

A. 1/9/20 Board meeting update: Mr. Sears provided a brief recap of the Board’s 1/9/20 meeting. In addition, Mr. Sears brought up the issue of Power Charge Indifference Adjustment (PCIA) “pays for the attributes” of GHG component of large hydro or nuclear power, but VCE does not benefit from them. The question of whether VCE accepts or rejects these attributes needs to be discussed. It is anticipated that the letter will come out February 1st and VCE will have 30 days to respond. This issue will be presented to the Board for their decision. The CAC agreed to hold a special meeting on Wednesday, February 5, 2020 at 2 p.m. to discuss this issue and make a recommendation to the Board.

B. CAC discussion on Task Groups to determine structure for 2020. The following Task Groups were formed:

Regulatory and Legislative Task Group Outreach Task Group Programs Task Group Strategic Planning Task Group Rates Task Group Motion passed: 5-0-0 For those members that were not present, staff is to follow up with them individually to ask which task groups they would be interested in being a part of.

C. Review of Vision Statement. It was agreed that the vision statement needs to be reviewed along with long term analysis of the SWOT results. This can be done after the Strategic Plan has been adopted.

47

D. Update on potential acquisition of PG&E’s local electricity distribution system. Mr. Sears provided an update of PG&E’s bankruptcy. Interest was expressed in documenting “lessons learned” of the acquisition process in bankruptcy court to be shared with other CCAs.

E. Election of Officers. Yvonne Hunter will serve as Chair and Marsha Baird will serve as Vice Chair. The Secretary position has been eliminated. Motion passed: 5-0-0

48

1

VALLEY CLEAN ENERGY ALLIANCE

Staff Report – Item 12

TO: Valley Clean Energy Alliance Board of Directors

FROM: Mitch Sears, Interim General Manager

SUBJECT: Legal Services – Contract Amendment for Regulatory Legal Services

DATE: February 13, 2020

RECOMMENDATION Adopt a resolution approving an amendment to the legal services agreement with Keyes and Fox for regulatory legal services modifying the terms and timing of the agreement. BACKGROUND and ANALYSIS Valley Clean Energy (VCE), engaged Keyes and Fox (K&F) to provide regulatory legal services in June 2018. The original contract was structured on a calendar year basis through the end of 2019. As with other service contracts, staff is attempting to align them with the fiscal year calendar (July - June), to ease administration and budgetary planning for VCE. In discussions with K&F in late 2019 regarding contract renewal, staff proposed and K&F accepted the concept of a contract extension to June 30, 2020 to align with the fiscal year. The attached contract amendments provide for this extension with an updated scope of work to include the regulatory filings and CPUC activities that are scheduled for the first half of 2020 (Attachment 3, Scope of Services). The “not to exceed” amounts for the existing scope of work tasks are also reset to account for the additional 6 months of the revised contract (Jan – June 2020). Additionally, the amendments include a cost of living based increase to rates at an average of 5-6% over the 2019 K&F rates (Attachment 5, pg4 – Payment/Rates). The amendment to the K&F rate schedule and corresponding “not to exceed” amounts for tasks contained in the amended scope of work are within the current fiscal year budget for regulatory legal services (FY 19/20). Note, K&F is performing minor tasks related to PG&E bankruptcy monitoring at the CPUC. As directed by the Board, legal services activities related to the PG&E bankruptcy are accounted for in VCE’s contingency budget for this fiscal year. CONCLUSION The proposed amendments are necessary for VCE’s continuing regulatory compliance activities and staff is recommending approval of the amendments because the rates are competitive with the market, the services delivered continue to be of high quality, and that this action will allow VCE to simplify administration by aligning contracts with VCE’s fiscal year calendar. Therefore,

49

2

staff is recommending that the Board approve the modifications included in the attached contract amendments with K&F. ATTACHMENTS 1. Resolution 2. Legal Services Agreement Amendment – K&F 3. Legal Services Agreement Amendment – Exhibit A (Scope of Services) 4. Legal Services Agreement Amendment – Exhibit C (Schedule of Services) 5. Legal Services Agreement Amendment – Exhibit D (Payment and Rates) Note: no changes are proposed to contract exhibit B.

50

VALLEY CLEAN ENERGY ALLIANCE

RESOLUTION NO. 2020- ____

A RESOLUTION OF THE VALLEY CLEAN ENERGY ALLIANCE APPROVING AMENDMENT TWO (2) TO THE KEYES & FOX LLP AGREEMENT FOR REGULATORY COMPLIANCE AND

ADVOCACY LEGAL SERVICES AND AUTHORIZING THE VCE INTERIM GENERAL MANAGER TO EXECUTE THE AMENDMENT

WHEREAS, the Valley Clean Energy Alliance (“VCE”) is a joint powers agency established under the Joint Exercise of Powers Act of the State of California (Government Code Section 6500 et seq.) (“Act”), and pursuant to a Joint Exercise of Powers Agreement Relating to and Creating the Valley Clean Energy Alliance between the County of Yolo (“County”), the City of Davis (“Davis”), the City of Woodland and the City of Winters (“Cities”) (the “JPA Agreement”), to collectively study, promote, develop, conduct, operate, and manage energy programs; and, WHEREAS, on June 26, 2018 an agreement was entered into between Valley Clean Energy and Keyes & Fox LLP to provide legal services related to regulatory compliance and regulatory advocacy, expiring December 31, 2018; and

WHEREAS, Keyes & Fox LLP also provides regulatory counsel support to CalCCA and other Community Choice Aggregators on joint California Public Utilities Commission filings; and

WHEREAS, on January 23, 2019 Amendment One (1) to the Keyes & Fox LLP agreement was approved extending the term through December 31, 2019 and refining the previous scope of services and budget for 2019; and, WHEREAS, to align the contract from a calendar year to a fiscal year (July – June) to ease administration and budgetary planning for VCE, in late 2019, staff proposed and Keyes & Fox LLC accepted the concept of a contract extension to June 30, 2020 to align with the fiscal year; and, WHEREAS, in addition to the contract time extension to align with VCE’s fiscal year, the scope of work and budgeted amounts have been updated to be consistent with the contract extension.

NOW, THEREFORE, the Board of Directors of the Valley Clean Energy Alliance hereby authorizes the VCE Interim General Manager, in consultation with VCE Legal General Counsel, to finalize, approve and execute on behalf of VCE Amendment Two (2) to the Keyes & Fox LLC Agreement for regulatory legal services modifying the terms and time of the agreement as set forth in the attached Exhibit A - Amendment Two (2) to Keyes & Fox LLC Agreement. 51

PASSED, APPROVED, AND ADOPTED, at a regular meeting of the Valley Clean Energy Alliance, held on the ___ day of _____________ 2020 by the following vote: AYES: NOES: ABSENT: ABSTAIN: _____________________________________ Don Saylor, VCE Chair ___________________________________ Alisa M. Lembke, VCE Board Secretary Attachment: Exhibit A - Amendment Two (2) to Keyes & Fox LLC Agreement 52

Exhibit A

Amendment Two (2) to Keyes & Fox LLC Agreement

53

VCEA —Amendment No.2 (Keyes & Fox)

Page 1 of 3 83588.00001\32600972.1

AMENDMENT NO. TWO (2)

TO THE AGREEMENT FOR CONSULTANT SERVICES

BETWEEN

VALLEY CLEAN ENERGY ALLIANCE

AND

KEYES & FOX LLP

1. Parties and Date.

This Amendment No. Two (2) to the Consultant Services Agreement for Consultant Services

is made and entered into as of this 31st6th day of January 201920, by and between Valley Clean

Energy Alliance, a Joint Powers Agency, existing under the laws of the State of California with its

principal place of business at 604 2nd Street, Davis, California 95616 (“VCEA”) and Keyes & Fox

LLP, a Limited Liability Partnership with its principal place of business at 580 California St., 12th

Floor San Francisco, California 94104 436 14th Street, Suite 1305, Oakland, California 94612

(“K&F”). VCEA and K&F are sometimes individually referred to as “Party” and collectively as

“Parties.”

2. Recitals.

2.1 Keyes & Fox LLP. VCEA and K&F have entered into an agreement entitled

“Agreement for Consultant Services” dated June 26, 2018 for the purpose of retaining K&F to

provide the services described in the Agreement and Amendment No. One to that Agreement dated

February 6, 2019. (“collectively referred to as “ Agreement”)

2.2 Amendment Purpose. VCEA and K&F desire to amend the Agreement to extend the

Agreement for an additional six months to expire on June 30, 2020 and, therefore, to revise the scope

of services, and provide the not-to-exceed compensation amount for the additional six (6) months.

2.3 Amendment Authority. This Amendment No. Two (2) is authorized pursuant to

Section 6.10 of the Agreement.

3. Terms.

3.1 Amendment. Section 1.4 of the Agreement is hereby amended in its entirety to read

as follows:

1.4 Term The term of this Agreement, as amended, shall begin on January 1,

2020 and shall end on June 30, 2020, unless amended as provided in

the Agreement, or when terminated as provided in Article 5.

54

VCEA —Amendment No.2 (Keyes & Fox)

Page 2 of 3 83588.00001\32600972.1

3.2 Amendment. Section 4.1 of the Agreement is hereby amended in its entirety to read

as follows:

4.1 Compensation This is a “time and materials” based agreement. Consultant

shall receive compensation, including authorized

reimbursements, for Services rendered under this Agreement at

the rates, in the amounts and at the times set forth in

Exhibit D. Notwithstanding the provisions of Exhibit D, the

total compensation shall not exceed eighty-eight one hundred

forty-two thousand threesix hundred and no/100 dollars

($88142,3600) without written approval of VCEA. Extra

Work may be authorized, as described below, and if

authorized, will be compensated at the rates and manner set

forth in this Agreement.

3.3 Amendment. Exhibits A, C and D of the Agreement are hereby replaced in their

entirety by the Exhibits A, C and D attached hereto, which are incorporated herein.

3.4 Continuing Effect of Agreement. Except as amended by this Amendment No. Two

(2), all other provisions of the Agreement remain in full force and effect and shall govern the actions

of the parties under this Amendment No. Two (2). From and after the date of this Amendment No.

Two (2), whenever the term “Agreement” appears in the Agreement, it shall mean the Agreement as

amended by this Amendment No. Two (2).

3.5 Adequate Consideration. The Parties hereto irrevocably stipulate and agree that they

have each received adequate and independent consideration for the performance of the obligations

they have undertaken pursuant to this Amendment No. Two (2).

3.6 Severability. If any portion of this Amendment No. Two (2) is declared invalid,

illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions

shall continue in full force and effect.

[Signatures on Next Page]

55

VCEA —Amendment No.2 (Keyes & Fox)

Page 3 of 3 83588.00001\32600972.1

SIGNATURE PAGE FOR AMENDMENT NO. ONE (1) TO THE AGREEMENT FOR

CONSULTANT SERVICES

BETWEEN VALLEY CLEAN ENERGY ALLIANCE

AND KEYES & FOX LLP

IN WITNESS WHEREOF, the Parties have entered into this Amendment No. TWO (2)ONE

(1) as of the 31st6th day of January,February 2019.

VALLEY CLEAN ENERGY ALLIANCE KEYES & FOX LLP

By: By:

Mitch Sears

Interim General Manager Its: Partner

Printed Name: Sheridan PaukerTimothy

J. Lindl

APPROVED AS TO FORM:

By:

Harriet Steiner

VCEA Attorney

56

1

EXHIBIT A

SCOPE OF SERVICES

Services Keyes & Fox LLP Will Provide

Task 1: Maintain a calendar of regulatory compliance filing obligations and deadlines

and provide a weekly snapshot highlighting upcoming filing dates and responsibilities.

The weekly snapshot includes CPUC, CAISO, CEC, CARB, and U.S. EIA compliance

deliverables.

Task 2: Review compliance filings after they are prepared by SMUD to ensure they are

complete and correct prior to filing. A compliance review will be conducted for the

following filings: (1) RPS Compliance Report; (2) Revised 2019 RPS Procurement Plan;

(23) 2020 RPS Procurement Plan; (4) 2020 IRP; (35) Month-Ahead Resource Adequacy

(RA) templates (12 templates total); (46) Monthly Load Migration Forecast (12

templates total); (57) Year-Ahead System, Local and Flexible RAR compliance showing

(6 templates total). Once complete, K&F will submit the (1) RPS Compliance Report and

(2) RPS Procurement Plan and (3) IRP filings to appropriate regulatory authorities on

behalf of VCE.

Task 3: Support VCEA staff team as its expert regulatory resource by (i) participating in

California Community Choice Association’s (“CalCCA’s”) weekly regulatory call to keep

abreast of positions and activities and informing VCEA of any proceedings that will

directly impact VCE in a way that CalCCA is not directly addressing, (ii) monitoring key

regulatory proceedings (initial list in Exhibit A), notifying VCEA in a timely manner of

issues arising in those proceedings that will critically impact VCEA, and attending

monthly Board Meetings to explain such issues, if necessary, and (iii) drafting monthly

informational memos for the Board of Directors covering the key regulatory

proceedings and additional proceedings that may have an impact on VCEA’s

compliance obligations.

Task 4: Review contracts entered between VCEA and SMUD and VCEA and third

parties. K&F understands many of the key contracts between VCEA and SMUD have

already been executed and that the need for additional contracting with SMUD and

third parties will be limited, so K&F proposes setting aside a small portion of the total

budget for this item.

57

2

An initial list of the key regulatory proceedings at the California Public Utilities

Commission discussed above is as follows:

Docket Number Subject Matter

R.11-05-005 Renewable Portfolio Standard Rulemaking

I.15-08-019 Investigation into PG&E Organization, Culture & Governance

R.16-02-007 Integrated Resource Planning Rulemaking

R.17-06-02605 Power Charge Indifference Adjustment Rulemaking

R.17-09-020 Resource Adequacy Rulemaking (2019 – 2020)

A.17-12-011, et al. PG&E Rate Design Window Proceeding

R.18-07-003 RPS Rulemaking

A.18-12-009 PG&E Phase I GRC

A.19-06-XXX (TBD) 2020 PG&E Energy Resource and Recovery Account Compliance Proceeding (Filed late February 2019)

R.19-01-006 Wildfire Cost Recovery Methodology Rulemaking

A.19-02-018 2018 PG&E Energy Resource and Recovery Account Compliance Proceeding

R.19-03-009 Direct Access Rulemaking

A.19-06-001XXX (TBD) 2020 PG&E Energy Resource and Recovery Account Forecast Proceeding (Filed June 1, 2018)

I.19-06-015 Investigation into PG&E Violations Related to Wildfires

R.18-10-007 Utility Wildfire Mitigation Plan

A.18-11-018 PG&E 2019 Rate Design Window

I.15-08-019 PG&E Organization Culture & Governance

A.19-08-XXX (TBD) PG&E Phase II GRC (c. Aug. 2019)

R.19-XX-XXX (TBD) IRP Rulemaking (New Docket)

R.19-01-XXX (TBD) Wildfire Cost Recovery Rulemaking (c. Jan 2019)

R.19-07-017 Wildfire Fund Non-Bypassable Charge (AB 1054) Rulemaking

I.19-09-016 Investigation of PG&E Bankruptcy Plan

R.19-11-009 Resource Adequacy Rulemaking (2021-2022)

A.19-11-019 PG&E Phase II GRC

R.20-XX-XXX (TBD) IRP Rulemaking (New Docket)

A.20-XX-XXX (TBD) 2021 PG&E Energy Resource and Recovery Account Forecast Proceeding (c. February 2020)

58

3

Docket Number Subject Matter

A.20-XX-XXX (TBD) 2019 PG&E Energy Resource and Recovery Account Compliance Proceeding (c. June 2020)

Note re Regulatory Advocacy: Since the vast majority of VCEA’s advocacy in proceedings

before regulators is anticipated to be through CalCCA and others during 202019, the need for

drafting of motions for party status, pleadings, responses to discovery requests or responses

thereto, comments related to compliance filings, or Advice Letters; conducting significant legal

or policy research; reviewing or providing feedback to VCEA on CalCCA or other CCA joint filings;

attending CalCCA-related calls other than the monthly regulatory call; or attending hearings,

workshops or meetings with regulators is anticipated to be very limited at this time. For

example, the tasks above do not include the drafting of testimony, reply testimony, briefs or

hearing attendance in the PG&E Bankruptcy OII docket (I.19-09-016)responses to discovery

requests or the filing of individual VCEA comments in the Power Charge Indifference Adjustment

docket (R.17-06-026). To the extent VCEA requires such work, that work, and any associated

expenses, travel, and time spent filing and serving documents, shall be considered “Extra Work”

pursuant to Section 4.5 of this Agreement and invoiced at the hourly rates listed in Exhibit D.

59

EXHIBIT C 82503.01000\7922616.3

EXHIBIT C

SCHEDULE OF SERVICES

The scope of this contract commences on January 1, 202019 and runs through June 30December 31, 202019. The schedule may be extended by mutual agreement in writing by both parties.

60

1

EXHIBIT D

PAYMENT

Subject to adjustments necessary for the minimum set fee related to Task 3 and the do-not-exceed levels related to Tasks 1-4 (“Do-Not-Exceed”) below, all work will be performed at the hourly billing rates set forth below as “Keyes & Fox LLP 202019 Hourly Rates”. Keyes & Fox LLP (“K&F”) will invoice Valley Clean Energy Alliance (“VCEA”) monthly. K&F will keep an hourly total of any time spent on VCEA matters. K&F invoices will list the matter worked on and provide information on the dates of service, time involved, attorney or other personnel responsible and activity undertaken. Any unpaid amounts after forty-five (45) days will accrue interest at a rate of nine percent (9%) per annum. All fees for services will be earned as of the time of invoicing. Expenses, travel time, and time for filing and service are included in the fee structure outlined below unless they are associated with “Extra Work” pursuant to Section 4.5 of this Agreement and, in that case, will be billed at cost (for expenses) or at the billable rates below (for time spent travelling, filing and serving).

61

2

Services Keyes & Fox LLP Will Provide Fee Structure

Task 1: Maintain a calendar of regulatory compliance filing

obligations and deadlines and provide a weekly snapshot

highlighting upcoming filing dates and responsibilities. The

weekly snapshot includes CPUC, CAISO, CEC, CARB, and U.S.

EIA compliance deliverables.

Billed hourly with a

Do-Not-Exceed for Q1

and Q2 2019 of

$36,3600

Task 2: Review compliance filings after they are prepared by

SMUD to ensure they are complete and correct prior to filing.

A compliance review will be conducted for the following

filings: (1) RPS Compliance Report; (2) Revised 2019 RPS

Procurement Plan; (3) 2020 RPS Procurement Plan; (4) 2020

IRP(2) RPS Procurement Plan; (53) Month-Ahead Resource

Adequacy (RA) templates (12 templates total); (64) Monthly

Load Migration Forecast (12 templates total); (75) Year-

Ahead System, Local and Flexible RAR compliance showing (6

templates total). Once complete, K&F will submit the (1) RPS

Compliance Report and (2) RPS Procurement Plan and (3) IRP

filings to appropriate regulatory authorities on behalf of VCE.

Billed hourly with a

Do-Not-Exceed for Q1

and Q2 of 202019 of

$210,000

Task 3: Support VCEA staff team as its expert regulatory

resource by (i) participating in California Community Choice

Association’s (“CalCCA’s”) weekly regulatory call to keep

abreast of positions and activities and informing VCEA of any

proceedings that will directly impact VCE in a way that

CalCCA is not directly addressing, (ii) monitoring key

regulatory proceedings (initial list in Exhibit A), notifying

VCEA in a timely manner of issues arising in those

proceedings that will critically impact VCEA, and attending

monthly Board Meetings to explain such issues, if necessary,

and (iii) drafting monthly informational memos for the Board

of Directors covering the key regulatory proceedings and

additional proceedings that may have an impact on VCEA’s

compliance obligations.

$67,000/month

minimum set fee with

(a) time spent above

the $67,000 billed

hourly and (b) an

aggregate Do-Not-

Exceed for Q1 and Q2

of 202019 for Task 4

of $60115,000

62

3

Services Keyes & Fox LLP Will Provide Fee Structure

Task 4: Review contracts entered between VCEA and SMUD

and VCEA and third parties. K&F understands many of the key

contracts between VCEA and SMUD have already been

executed and that the need for additional contracting with

SMUD and third parties will be limited, so K&F proposes

setting aside a small portion of the total budget for this item.

Billed hourly with a

Do-Not-Exceed for Q1

and Q2 of 2020 of

$511,000

Note re Regulatory Advocacy: Since the vast majority of VCEA’s advocacy in proceedings before regulators is anticipated to be through CalCCA and others during 202019, the need for drafting of motions for party status, pleadings, responses to discovery requests or responses thereto, comments related to compliance filings, or Advice Letters; conducting significant legal or policy research; reviewing or providing feedback to VCEA on CalCCA or other CCA joint filings; attending CalCCA-related calls other than the monthly regulatory call; or attending hearings, workshops or meetings with regulators is anticipated to be very limited at this time. For example, the tasks above do not include the drafting of testimony, reply testimony, briefs or hearing attendance responses to discovery requests or the filing of individual VCEA comments in the PG&E Bankruptcy OII Power Charge Indifference Adjustment docket (IR.197-096-0126). To the extent VCEA requires such work, that work, and any associated expenses, travel, and time spent filing and serving documents, shall be considered “Extra Work” pursuant to Section 4.5 of this Agreement and invoiced at the hourly rates listed herein. K&F and VCEA will review the Do-Not-Exceed amounts set forth above upon a request from either VCEA or K&F for such a review. Any changes to the Do-Not-Exceed amounts resulting from such review shall not affect the amount of any fees already earned.

63

4

Keyes & Fox LLP 202019 Hourly Rates It is K&F’s policy to adjust hourly rates for all personnel at the beginning of the calendar year. Rates quoted here are 202019 rates.

ATTORNEYS

Kevin Fox 360 Tim Lindl 295 Sheridan Pauker 350* Scott Dunbar 245 Julia Kantor 225 Melissa Birchard 220 Beren Argetsinger 210

*$385 for compliance/transactional matters

NON-ATTORNEYS

Miriam Makhyoun 185/260**

Amanda Vanega 180

Justin Barnes 180/260**

Charlie Coggeshall 180

Ben Inskeep 145/200**

Blake Elder 120

Vanessa Luthringer 95 Alicia Zaloga 90

** expert witness rates

ATTORNEYS

Kevin Fox 340 Tim Lindl 275 Sheridan Pauker 330 Scott Dunbar 220 Beren Argetsinger 200 NON-ATTORNEYS

Amanda Vanega 170 Justin Barnes 170

64

5

Chelsea Barnes 160 Laurel Passera 140 Ben Inskeep 135 Blake Elder Vanessa Luthringer

110 90

65

1

VALLEY CLEAN ENERGY ALLIANCE

Staff Report – Item 13

TO: Valley Clean Energy Alliance Board of Directors

FROM: Mitch Sears, Interim General Manager

SUBJECT: Legal Services – Contract Amendment for General Counsel Services

DATE: February 13, 2020

RECOMMENDATION Adopt a resolution approving an amendment to the legal services agreement with Best, Best & Krieger for co-general counsel services modifying the terms and timing of the agreement. BACKGROUND and ANALYSIS Valley Clean Energy (VCE), began its pre-launch feasibility phase in 2015/16 with legal services provided jointly by the two entities involved in the formation of the CCA at that time: Yolo County and the City of Davis. Each provided strengths and depth of subject matter such as JPA formation, countywide perspective, utility formation (e.g. Clean Water District), electricity utility formation (e.g. SMUD annexation), and experience during PG&E’s 2001/02 bankruptcy. VCE’s legal services needs have evolved but are still well served by the joint approach and are specifically managed to minimize duplicative efforts. In June 2019 the Board approved retaining the co-general counsel approach for legal services and continued the contracts and terms with Best, Best & Krieger (BBK) and the Yolo County Counsel’s Office. At that time, BBK informed staff that the rate in the existing contract was below its standard rate for public entities ($325/hr). In late 2019, BBK approached staff to revisit the VCE contract rate ($213/hr) to bring it closer in line with its public entity rate. After discussion, BBK agreed to a rate similar to its City Attorney rate for the City of Woodland (~$250/hr). BBK also agreed to a step approach for the first half of 2020 to $235/hr, increasing to $250/hr at the beginning of the new fiscal year in July 2020. The amendment to the BBK rate is within the current fiscal year budget for general counsel legal services. As directed by the Board, BBK’s activities related to the PG&E bankruptcy are accounted for in VCE’s contingency budget for this fiscal year. CONCLUSION Staff believes that these modified rates are favorable in the market for CCA general counsel legal services and that the quality of the general counsel legal services provided continues to be high. Therefore, staff is recommending that the Board approve the rate modifications included

66

2

in the attached amended contract with BBK, retroactive to January 1, 2020. Note: no modifications are proposed for the contract with County Counsel’s office. ATTACHMENTS 1. Resolution 2. Legal Services Agreement Amendment – BBK

67

VALLEY CLEAN ENERGY ALLIANCE

RESOLUTION NO. 2020- ____

A RESOLUTION OF THE VALLEY CLEAN ENERGY ALLIANCE APPROVING AMENDMENT ONE (1) TO THE BEST, BEST & KRIEGER AGREEMENT FOR CO-GENERAL COUNSEL LEGAL SERVICES AND AUTHORIZING THE VCE INTERIM GENERAL MANAGER TO EXECUTE THE

AMENDMENT WHEREAS, the Valley Clean Energy Alliance (“VCE”) is a joint powers agency established under the Joint Exercise of Powers Act of the State of California (Government Code Section 6500 et seq.) (“Act”), and pursuant to a Joint Exercise of Powers Agreement Relating to and Creating the Valley Clean Energy Alliance between the County of Yolo (“County”), the City of Davis (“Davis”), the City of Woodland and the City of Winters (“Cities”) (the “JPA Agreement”), to collectively study, promote, develop, conduct, operate, and manage energy programs; and, WHEREAS, in June 2019 an agreement was entered into between VCE and Best, Best & Krieger (“BBK”) for continued legal services as VCE’s general co-counsel with Yolo County Counsel’s Office; and, WHEREAS, BBK informed staff that the rate in the existing contract was below its standard rate for public entities; and, WHEREAS, to bring the existing contract rate closer in line with the market for CCA general counsel legal services and BBK’s public entity rate, a step approach to increase the hourly rate was proposed.

NOW, THEREFORE, the Board of Directors of the Valley Clean Energy Alliance hereby authorizes the VCE Interim General Manager to execute on behalf of VCE Amendment One (1) to the Best, Best & Krieger Agreement for legal services modifying the terms, retroactive to January 1, 2020, as set forth in the attached Exhibit A - Amendment One (1) to Best, Best & Krieger Agreement. PASSED, APPROVED, AND ADOPTED, at a regular meeting of the Valley Clean Energy Alliance, held on the ___ day of _____________ 2020 by the following vote: AYES: NOES: ABSENT: ABSTAIN: _____________________________________ Don Saylor, VCE Chair ____________________________________ Alisa M. Lembke, VCE Board Secretary Attachment: Exhibit A - Amendment One (1) to Best, Best & Krieger Agreement 68

Exhibit A

Amendment One (1) to Best, Best & Krieger Agreement

69

VCEA —Amendment No.1 Best Best and Krieger

Page 1 of 3 83588.00001\32664182.1

AMENDMENT NO. ONE (1)

TO THE LEGAL SERVICES AGREEMENT

BETWEEN

VALLEY CLEAN ENERGY ALLIANCE

AND

BEST BEST & KRIEGER, LLP

1. Parties and Date.

This Amendment No. One (1) to the Legal Services Agreement is made and entered into as

of this 13th day of February 2020, by and between Valley Clean Energy Alliance, a Joint Powers

Agency, existing under the laws of the State of California (“VCEA”) and Best Best & Krieger, LLP,

a Limited Liability Partnership (“BB&K”). VCEA and BB&K are sometimes individually referred

to as “Party” and collectively as “Parties.”

2. Recitals.

2.1 . VCEA and BB&K entered into a legal services agreement effective June 1, 2019

for the purpose of retaining BB&K to provide legal services described in the Agreement and to serve

as Co-General counsel to VCEA. (“the “ Agreement”)

2.2 Amendment Purpose. VCEA and BB&K desire to amend the Agreement to revise

the hourly rate for legal services under the Agreement.

3. Terms.

3.1 Amendment. The section of the Agreement entitled “Your Obligations about Fees

and Billings” is hereby amended in its entirety to read as follows:

YOUR OBLIGATIONS ABOUT FEES AND BILLINGS

We have already discussed the fee arrangement with you. We will

continue to represent VCEA at the rate of $213 $235/hour from January 1,

2020 until July 1, 2020 and the rate of $250/hour thereafter until July 1,

2020 and the rate of $250/hour thereafter for general counsel work. Absent

our request and your consent to a different fee structure, this fee will adjust by

the change in the cost of living or CPI on July 1 of each year, beginning on

July 1, 2021.

70

VCEA —Amendment No.1 Best Best and Krieger

Page 2 of 3 83588.00001\32664182.1

To the extent that VCEA requires any additional specialized work (such

as pension or personnel work), we will notify you and that work will be at the

then current public agency standard rates for the attorney doing the work.

Standard pubic agency rates currently range from $225 to $450 $495 per hour.

As we discussed, BBK reviews its rates periodically. Should BBK desire a fee

increase or modification in the future, we will contact you and discuss the

proposed revised rates with you before implementing any change.

Attached to this letter is a memorandum that describes the other aspects

of our firm's billing policies. You should consider this memorandum part of

this agreement as it binds both of us. For that reason, you should read it

carefully.

3.4 Continuing Effect of Agreement. Except as amended by this Amendment No. One

(1), all other provisions of the Legal Services Agreement remain in full force and effect and shall

govern the actions of the parties. From and after the date of this Amendment No. One (1) whenever

the term “Agreement” appears in the Agreement, it shall mean the Agreement as amended by this

Amendment No. One (1).

3.6 Severability. If any portion of this Amendment No. One (1) is declared invalid,

illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions

shall continue in full force and effect.

[Signatures on Next Page]

71

VCEA —Amendment No.1 Best Best and Krieger

Page 3 of 3 83588.00001\32664182.1

SIGNATURE PAGE FOR AMENDMENT NO. ONE (1) TO THE AGREEMENT FOR

CONSULTANT SERVICES

BETWEEN VALLEY CLEAN ENERGY ALLIANCE

AND BEST BEST & KRIEGER, LLP

IN WITNESS WHEREOF, the Parties have entered into this Amendment No. ONE (1) as of

the __day of February 2020.

VALLEY CLEAN ENERGY ALLIANCE BEST BEST & KRIEGER, LLP

By: By:

Mitch Sears

Interim General Manager Its: Partner

Printed Name:

APPROVED AS TO FORM:

By:

Eric May

VCEA Attorney

72

1

VALLEY CLEAN ENERGY ALLIANCE

Staff Report – Item 14

To: Valley Clean Energy Alliance Board of Directors

From: Mitch Sears, Interim General Manager Subject: Approval of Amendments to Task Orders of the SMUD Professional Services

Agreement Date: February 13, 2020 ______________________________________________________________________________ RECOMMENDATION Adopt a resolution: 1) Approving Amendment 15 to Task Order 4 (operational staff services) and authorizing the Interim General Manager to sign the Amendment on behalf of VCE; and, 2) Ratifying the Interim General Manager’s approval and execution of Amendment 14 to Task Order 3 (wholesale energy services). BACKGROUND AND ANALYSIS On October 12, 2017 the VCE Board approved a Professional Services Agreement with the Sacramento Municipal Utility District (SMUD) and Task Orders 1 and 2 to provide program launch and operational services. Soon thereafter, a series of additional Task Orders were added to the Agreement, including Task Order 3 to provide Wholesale Energy Services and Task Order 4 to provide Operational Staff Services to VCE. As VCE progresses through Fiscal Year (FY) 2019/2020, VCE’s budgeted approach to the Power Director role has evolved. The Proxy Power Director provided by SMUD announced his pending retirement and VCE acknowledged the importance of bringing that function in house. The impact to costs will need to be adjusted in the operational budget to reflect the change from SMUD providing this service to VCE hiring a Power Director. Task Order 3 (Wholesale Energy Services): Amendment 14 to SMUD agreement Task Order 3 (wholesale energy services) extends SMUD’s credit support services to the end of 2023. The scope of credit support and $0.80 per MWh fee are unchanged. The original contract period was five years from VCE’s June 2018 launch, resulting in a May 31, 2023 end date. The urgency of extending credit services at this time is due to a new three year ahead resource adequacy (RA) compliance obligation implemented by the CPUC in late 2019. VCE is obligated to procure a subset of its estimated RA volume three years in advance, meaning that by October 2020, VCE must demonstrate it has procured the 2023 RA compliance obligation. Due to current RA market conditions, time is of the essence to get the SMUD credit services extension in place so that SMUD was authorized to begin 2023 RA procurement on VCE’s behalf. The estimated cost to extend the credit support services by 6 months to the end of 2023 is less than $30,000. Therefore, due to the time sensitivitive nature

73

2

of the RA procurement, the Interim General Manager, after consulting with VCE legal counsel, signed in accordance with his contract delegation authority from the Board. The requested action is a Board ratification of his signature to extend the credit support services by 6 months. Task Order 4 (Operational Staff Services): Amendment 15 to SMUD agreement Task Order 4 (operational services staff) modifies the scope of SMUD’s Proxy Power Director obligation. Effective December 20, 2019, SMUD is no longer providing VCE’s Proxy Power Director. The original scope is replaced with a transitional support scope during VCE’s transition to an in-house Power Director. As VCE now has a Power Director in-house, SMUD subject matter experts will continue to provide transitional support to the new Power Director as needed for a period of time, at the hourly rates defined in Task Order 4. FINANCIAL IMPACT The elimination of the Proxy Power Director role reduces VCE’s expenditure with SMUD by the $16,150 monthly fixed fee. This cost reduction is offset by the staffing cost to hire the Power Director as a VCE employee, as well as a temporary SMUD cost for as-needed transitional support. The credit services support extension, at a cost of $0.80 per MWh derated by the percent of contracts that VCE procures in their name, is estimated to increase VCE’s credit support costs less than $30,000, payable in the month of energy deliveries in 2023. To the degree that SMUD procures additional 2023 energy products on VCE’s behalf, the credit support cost will increase. The anticipated power cost changes will be budgeted in the FY2020/2021 draft operating budget, which will be presented to the Board for final approval at the June 11, 2020 meeting. The credit support cost change will be factored into the FY2023/24 budget. CONCLUSION Staff is recommending the VCE Board adopt the attached resolution 1) approving Amendment 15 to Task Order 4 (operational staff services) and authorizing the Interim General Manager to sign the Amendment on behalf of VCE and 2) ratifying the Interim General Manager’s approval and execution of Amendment 14 to Task Order 3 (wholesale energy services). Attachments: 1. Resolution approving Amendment 15 to Task Order 4 (operational staff services) and

authorizing the Interim General Manager to sign the Amendment on behalf of VCE and ratifying the Interim General Manager’s approval and execution of Amendment 14 to Task Order 3 (wholesale energy services).

2. Amendment 14 to Task Order 3 (Wholesale Energy Services) 3. Amendment 15 to Task Order 4 (Operational Staff)

74

1

VALLEY CLEAN ENERGY ALLIANCE

RESOLUTION NO. 2020-___

A RESOLUTION OF THE VALLEY CLEAN ENERGY ALLIANCE RATIFYING THE INTERIM GENERAL MANAGER’S APPROVAL AND EXECUTION OF AMENDMENT 14 TO TASK ORDER 3 AND APPROVING AMENDMENT 15 TO TASK

ORDER 4 AND AUTHORIZING THE INTERIM GENERAL MANAGER TO SIGN THE AMENDMENT ON BEHALF OF VALLEY CLEAN ENERGY TO THE SACRAMENTO

MUNICIPAL UTILITIES DISTRICT PROFESSIONAL SERVICES AGREEMENT

WHEREAS, the Valley Clean Energy Alliance (“VCE”) is a joint powers agency established under the Joint Exercise of Powers Act of the State of California (Government Code Section 6500 et seq.) (“Act”), and pursuant to a Joint Exercise of Powers Agreement Relating to and Creating the Valley Clean Energy Alliance between the County of Yolo (“County”), the City of Davis (“Davis”), the City of Woodland and the City of Winters (“Cities”) (the “JPA Agreement”), to collectively study, promote, develop, conduct, operate, and manage energy programs; and, WHEREAS, on August 31, 2017, the VCEA Board considered a proposal by the Sacramento Municipal Utilities District (“SMUD”) to provide program launch and operational services and subsequently directed VCEA staff to negotiate a services agreement between VCEA and SMUD for consideration and action by the VCEA Board; and, WHEREAS, on September 21, 2017, the SMUD Board of Directors authorized its CEO to enter into a contract with VCE to provide Community Choice Aggregate support services; and,

WHEREAS, on November 16, 2017 the VCE Board approved Task Order 3 to provide Wholesale Energy Services consistent with the SMUD proposal and VCE Board direction; and,

WHEREAS, in May 2018 Amendment 2 to Task Order 3 was approved to include the record-keeping to support Green-e certification and set compensation for said services; and,

WHEREAS, in April 2019 Amendment 9 to Task Order 3 was approved updating the Integrated Resource Plan and set compensation for said services; and,

WHEREAS, on December 12, 2017, the VCE Board approved Task Order 4 to provide Operational Staff Services to VCE for program launch and operations; and,

WHEREAS, Task Order 4 was set to expire February 28, 2019 and Interim General Manager Mitch Sears signed Amendment 7 to Task Order 4 extending the term to June 30, 2019; and,

WHEREAS, in October 2018 Amendments 3 and 5 to Task Order 4 were approved adding scope of services related to power purchase agreements and designating an On-call Proxy Power

75

2

Director, and set compensation for said services;

WHEREAS, in December 2018 Amendment 6 to Task Order 4 was approved extending dedicated operational staff through February 28, 2019; and, WHEREAS, in February 2019 Amendment 7 to Task Order 4 was approved extending dedicated operational staff through June 30, 2019; and,

WHEREAS, in April 2019 Amendment 8 to Task Order 4 was approved 1) extending dedicated operational staff and the Power Director through June 30, 2020, 2) replacing sub-section 4.2.1 term and termination notification, and 3) increasing the fixed fee for operational staff effective July 1, 2019; and,

WHEREAS, in August 2019, Amendment 13 to Task Orders 3 and 4 was approved updating compensation for services and extending the term through June 30, 2020; and,

WHEREAS, due to current Resource Adequacy (“RA”) market conditions, time was of the essence to get the SMUD credit services extension in place so that SMUD was authorized to begin 2023 RA procurement on VCE’s behalf, Interim General Manager signed Amendment 14 to Task Order 3 amends Section 3, Term and Termination, to 1) extend the term from May 31, 2023, to December 31, 2023 only as related to the services provided in accordance with Section 1.13, Credit Support Services and 2) all other services will terminate on May 31, 2023, unless mutually agreed to in writing by the Parties; and,

WHEREAS, Amendment 15 to Task Order 4 cancels the On-call Proxy Power Director effective December 20, 2019, adds scope of services to transition the Power Proxy Director to a VCEA employee, and updates compensation for services to an hourly rate for professional services.

NOW, THEREFORE, the Board of Directors of the Valley Clean Energy Alliance resolves as follows:

1. ratify the Interim General Manager’s approval and execution of Amendment 14 to Task

Order 3 (wholesale energy services).

2. approve Amendment 15 to Task Order 4 (operational staff services) and authorize the Interim General Manager to sign the Amendment on behalf of VCE.

76

3

PASSED, APPROVED, AND ADOPTED, at a regular meeting of the Valley Clean Energy Alliance, held on the ___ day of _____________ 2020, by the following vote: AYES: NOES: ABSENT: ABSTAIN: _____________________________________ Don Saylor, VCE Chair ____________________________________ Alisa M. Lembke, VCEA Board Secretary

EXHIBIT A - Amendment 14 to Master Professional Services Agreement Task Order 3 Amendment 15 to Master Professional Services Agreement Task Order 4

77

4

EXHIBIT A

Amendment 14 to Master Professional Services Agreement Task Order 3

Amendment 15 to Master Professional Services Agreement Task Order 4

78

AMENDMENT 14 TO EXHIBIT A, TASK ORDER 3 2/4/2020

AMENDMENT 14 TO EXHIBIT A: Scope of Services

A.4 Task Orde.r 3 - Wholesale Energy Services

SMUD and VCEA agree to the foll.owing services, terms, and conditions described in this Amendment 14 to Exhibit A, Task Order No. 3 {Amendment 14), the provisions of which are subject to the terms and conditions of the Master Professional Services Agreement (Agreement) between the Parti.es. If any specific. provisions of this Amendment 14 conflict with any general ·provisions in the Agreement or Task Orders 4, the provisions of this Amendment 14, shall take precedence. Capitalized terms used in this Amendment which are not defined in this Amendment will have the respective meanings ascribed to them in the Agreement or a previous Amendment thereof.

1. Task Order 3, Section 3, Term and Terrnin<Jtion, is amended to add the following;

a. The Term of Task Order 3 is extended from May 31, 2023, to D.ece_mber 31, 2023

only as related to the services provided in accordance with Section 1.13, Credit

Support Services.

b. All other services will terminate on May 31, 2023_, unless mutually agreed to in

writing by the Parties.

(Signature page follows)

AMENDMENT 14 TO EXHIBIT A TASK ORDER 3.docx

1

79

AMEN OM ENI 14 TO EXHIBIT A, TASK ORDER 3

SIGNATURES

The Parties have executed this Amendment 14, and it is effective as of the date of last

signature below.

By:

Name:

Title:

Date:

Approved ·as to Form:

By:

Name:

Title:

Date:

Approved as to Form:

Valley~Alliante

7}-;? ~

kN7E/U-¥t b€1VE1eAL /!J/IAIA[!rG/<._

z/l//2D

Sacramento Municipal Utility District

Arlen Orchard

Chief Executive Officer and General Manager

AMENCiMENT 14 TO EXHIBIT A TASK ORDER 3.docx

2/4/2020

2

80

AMENDMENT 15 TO EXHIBIT A, Task Order No. 4

1 A15 TO 4 Final

AMENDMENT 15 TO EXHIBIT A: Scope of Services A.4 Task Order 4 – Operational Staff Services

SMUD and VCEA agree to the following services, terms, and conditions described in this Amendment 15 to Exhibit A, Task Order No. 4 (Amendment 15), the provisions of which are subject to the terms and conditions of the Master Professional Services Agreement (Agreement) between the Parties. If any specific provisions of this Amendment 15 conflict with any general provisions in the Agreement or Task Order No. 4, the provisions of this Amendment 15, shall take precedence. Capitalized terms used in this Amendment which are not defined in this Amendment will have the respective meanings ascribed to them in the Agreement or a previous Amendment thereof.

1. In accordance with the terms of Task Order No. 4, this Amendment 15 is to

memorialize the cancelation of the On-Call Proxy Power Director as documented in

Amendment 5 to Exhibit A, Scope of Services. This termination is effective as of

December 20, 2019.

2. Pursuant to Section 1.2 Professional Services of Task Order No. 4, the Parties agree to

the following additional scope of services:

SMUD will provide as-needed support to VCEA, as requested by VCEA, to transition

the duties of the Power Proxy Director to a VCEA employee. Support, may include

but not be limited to, the following:

• Energy Procurement – Work with the General Manager to support research

and due diligence for potential power supply opportunities, negotiation of

power purchase agreements, development and execution of VCEA’s

renewable, local and zero-carbon procurement efforts, issue identification,

and contract dispute resolution.

• Program Development – Work with the VCEA staff team on complementary

energy program development and implementation that may include some or

all of the following: net energy metering, feed in tariff, energy efficiency and

demand management, battery storage, electric vehicle and other

transportation incentives, distributed energy resource development, and

other programs that advance VCEA’s mission, provide community and

consumer benefits, and support carbon reduction goals.

• Finance - Assist in analysis relating to energy supply and local energy

development, and support budget analysis for rate design and rate setting.

• Regulatory - Work with the VCEA General Manager and Regulatory Counsel to

81

AMENDMENT 15 TO EXHIBIT A, Task Order No. 4

2 A15 TO 4 Final

provide quantitative analysis focused on VCEA’s energy supply portfolio,

VCEA’s load forecast, and broader California energy market conditions, with a

particular focus on all quantitative inputs into the Power Charge Indifference

Adjustment, in addition to coordinating required regulatory reporting, and

represents VCE as needed before regulatory and legislative bodies, and key

industry groups.

This work will be provided at the current hourly rates for Professional Services and

will be billed monthly in arrears, due Net 30.

SIGNATURES

The Parties have executed this Amendment 15, and it is effective as of the date of last

signature below.

Valley Clean Energy Alliance

By:

Name:

Title:

Date:

Approved as to Form:

Sacramento Municipal Utility District

By:

Name:

Title:

Date:

Approved as

82

AMENDMENT 15 TO EXHIBIT A, Task Order No. 4

3 A15 TO 4 Final

to Form:

83

VALLEY CLEAN ENERGY ALLIANCE

Staff Report – Item 15 ____________________________________________________________________________________

TO: VCE Board of Directors FROM: George Vaughn, Director of Finance & Internal Operations SUBJECT: Update to Employer Share of Medical Premiums; and update to Valley Clean Energy

Employee Handbook DATE: February 13, 2020

Recommendation 1. Adopt a resolution approving the updated employer share of medical premiums, benefits eligibility date and

update made to the Valley Clean Energy (VCE) Employee Handbook (Handbook).

Background VCE currently contributes up to $1,000 per month per employee towards VCEA’s medical, dental and vision insurance for a full-time employee and dependents coverage. VCEA will contribute a prorated amount for part-time employees based on the average hours worked (for example, if the part-time employee is regularly scheduled to work 30 hours per week, VCEA’s contribution toward the cost of VCEA’s medical, dental and vision insurance coverage for the part time employee and his/her eligible dependents would be prorated to 75% of the full-time equivalent, i.e., $750). The employee is responsible for any premiums due for VCEA coverage(s) that are in excess of the VCEA contribution amount. The current VCE policy also states that employees become eligible for medical, dental and vision insurance on the first of the month after the employee has completed 30 days of service with VCE. (E.g., if an employee starts work for VCE on January 15, 2020, the employee would become benefits eligible on March 1, 2020). However, to remain competitive in the recruiting and retention of high-caliber energy industry employees VCE has determined that a higher contribution amount and more rapid eligibility will make us more competitive in the CCA recruiting process and provide higher retention and satisfaction – at a minimal cost to VCE. Staff recommends that the $1,000 per month be increased to $1,650 per month. This is the approximate amount to cover an employee plus two dependents on a standard Kaiser Gold plan for 2020, including dental and vision.

84

Staff also recommends that employees become eligible for medical, dental and vision insurance on the first of the month after the employee has started employment with VCE. (E.g., if an employee starts work for VCE on January 15, 2020, the employee would become benefits eligible on February 1, 2020). These changes bring us closer in line with other comparative entities, including other CCA’s surveyed and SMUD. Out of four companies surveyed, the approximate range of employer covered contributions and similar benefits is in the $1,200 to $3,000 range. Three out of the four surveyed entities exceed the $1,650 staff is proposing. Staff requests that the Board approve this change, along with the following redline changes to the employee handbook benefits section to implement the medical benefits increase:

Medical, Dental and Vision Insurance: We provide access to medical, dental & vision insurance plans for eligible employees and their dependents. You may be required to provide adequate proof of the dependent relationship in order to add the dependents to VCEA’s insurance policies. Typically proof of the relationship may be established through a copy of a birth certificate, adoption documents, marriage license, or certificate of registered domestic partnership. We cannot guarantee your domestic partner relationship will be kept confidential.

Full-time employees and part-time employees who are regularly scheduled to work a minimum of 30 hours per week are eligible for VCEA’s medical, dental, and vision insurance coverage. Each employee becomes eligible on the first of the month after the employee has completed 30 days of continuous started employment with VCEA. VCEA will contribute up to $1,000 $1,650 per month per employee towards VCEA’s medical, dental and vision insurance for a full-time employee and dependents coverage. VCEA will contribute a prorated amount for part-time employees based on the average hours worked (for example, if the part-time employee is regularly scheduled to work 30 hours per week, VCEA’s contribution toward the cost of VCEA’s medical, dental and vision insurance coverage for the part time employee and his/her eligible dependents would be prorated to 75% of the full-time equivalent, i.e., $750 $1,237.50. The employee is responsible for any premiums due for VCEA coverage(s) that are in excess of the VCEA contribution amount. Deductions from the employee’s paycheck will be made to cover this cost. Information describing medical, dental and vision insurance benefits will be given to you when you become eligible to participate in the program. Eligible employees who elect not to receive medical insurance coverage from VCEA must provide proof of adequate medical coverage from an alternate source within 30 days of becoming eligible through VCEA for the benefit. Such election will be effective as of the employee’s eligibility date and will remain in effect until the start of the next open enrollment period. Employees who have declined VCEA medical insurance coverage and want to continue to decline coverage must provide proof of adequate medical coverage once per year, no later than 30 days prior to VCEA’s open enrollment period. Full time employees who decline to accept VCEA medical, dental, and vision insurance benefits shall receive a payment of $500 per month in lieu of coverage; part -time employees who are eligible for VCEA medical, dental and vision insurance and decline to accept VCEA medical, dental, and vision insurance shall receive a prorated payout based on the

85

employee’s regularly scheduled hours (i.e., an employee who is regularly scheduled to work 30 hours per week will receive 75% of the full-time equivalent, or $375.)

Attachment 1. Resolution

86

1

VALLEY CLEAN ENERGY ALLIANCE

RESOLUTION NO. 2020-___

RESOLUTION OF THE BOARD OF DIRECTORS OF THE VALLEY CLEAN ENERGY ALLIANCE

APPROVING THE UPDATES TO THE EMPLOYEE HANDBOOK WHEREAS, the Valley Clean Energy Alliance (“VCE”) is a joint powers agency established under the Joint Exercise of Powers Act of the State of California (Government Code Section 6500 et seq.) (“Act”), and pursuant to a Joint Exercise of Powers Agreement Relating to and Creating the Valley Clean Energy Alliance between the County of Yolo (“County”), the City of Davis (“Davis”), the City of Woodland and the City of Winters (“Cities”) (the “JPA Agreement”), to collectively study, promote, develop, conduct, operate, and manage energy programs; WHEREAS, on January 18, 2018, the Valley Clean Energy Employee Handbook was adopted; and, WHEREAS, on January 23, 2019, the Board approved updates to the employment regulations and edits to payroll operational procedures to the Employee Handbook; and, WHEREAS, on July 11, 2019, the Board approved updates to the Employee Handbook

incorporating new laws and personnel requirements; and,

WHEREAS, the current Employee Handbook needs to be updated to reflect benefits eligibility date; and, WHEREAS, in order to be competitive in the recruiting and retention of energy industry employees, a higher contribution amount per month per employee towards VCE’s medical, dental and vision insurance for a full-time employee and dependents coverage needs to be incorporated within the Employee Handbook. NOW, THEREFORE, the Board of Directors of the Valley Clean Energy Alliance resolves as follows: 1. Adopt changes to the Employee Handbook (July 2019), Insurance Benefits (page 34),

Medical, Dental and Vision Insurance (2nd paragraph) as follows: Medical, Dental and Vision Insurance: Full-time employees and part-time employees who are regularly scheduled to work a minimum of 30 hours per week are eligible for VCEA’s medical, dental, and vision insurance coverage. Each employee becomes eligible on the first of the month after the employee has completed 30 days of continuous started employment with VCEA. VCEA will contribute up to $1,000 $1,650 per month per employee towards VCEA’s medical, dental and vision insurance for a full-time employee and dependents coverage. VCEA will contribute a prorated amount for part-time employees based on the average hours worked (for example, if the part-time employee is regularly scheduled to work 30 hours per week, VCEA’s contribution toward the cost of VCEA’s

87

2

medical, dental and vision insurance coverage for the part time employee and his/her eligible dependents would be prorated to 75% of the full-time equivalent, i.e., $750 $1,237.50. The employee is responsible for any premiums due for VCEA coverage(s) that are in excess of the VCEA contribution amount. Deductions from the employee’s paycheck will be made to cover this cost. Information describing medical, dental and vision insurance benefits will be given to you when you become eligible to participate in the program. Eligible employees who elect not to receive medical insurance coverage from VCEA must provide proof of adequate medical coverage from an alternate source within 30 days of becoming eligible through VCEA for the benefit. Such election will be effective as of the employee’s eligibility date and will remain in effect until the start of the next open enrollment period. Employees who have declined VCEA medical insurance coverage and want to continue to decline coverage must provide proof of adequate medical coverage once per year, no later than 30 days prior to VCEA’s open enrollment period. Full time employees who decline to accept VCEA medical, dental, and vision insurance benefits shall receive a payment of $500 per month in lieu of coverage; part -time employees who are eligible for VCEA medical, dental and vision insurance and decline to accept VCEA medical, dental, and vision insurance shall receive a prorated payout based on the employee’s regularly scheduled hours (i.e., an employee who is regularly scheduled to work 30 hours per week will receive 75% of the full-time equivalent, or $375.)

PASSED, APPROVED, AND ADOPTED, at a regular meeting of the Valley Clean Energy Alliance, held on the ___ day of _____________ 2020, by the following vote: AYES: NOES: ABSENT: ABSTAIN: _____________________________________ Don Saylor, VCE Chair ___________________________________ Alisa M. Lembke, VCE Board Secretary

88

1

VALLEY CLEAN ENERGY ALLIANCE

Staff Report – Item 16

TO: VCE Board of Directors

FROM: Mitch Sears, Interim General Manager

Jim Parks, Director of Customer Care and Marketing

SUBJECT: Net Energy Metering (NEM) Policy Change

DATE: February 13, 2020

REQUESTED ACTION

Approve a revision to the VCE NEM policy as detailed in this report.

BACKGROUND

At the October 2019 VCE board meeting, the board approved changes to the NEM policy that allows existing VCE customers (customers that installed solar systems after our start-up in June 2018) to request annual billing. Prior to this change, the only option for existing VCE NEM customers was monthly billing. The policy became effective January 1, 2020. The policy states “The request must coincide with their existing PG&E true-up period.” The purpose for this statement was to protect available solar credits and to keep customers’ annual billing date consistent between VCE and PG&E. The SMUD billing system was designed to automatically true-up a customer account when the billing cycle changes, so a request to move from monthly billing to annual billing triggers a true-up.

UPDATE

Since that time, customers have approached VCE staff to request a switch to annual billing that does not coincide with their annual PG&E billing cycle. Customers that request annual billing off-cycle from their annual PG&E true-up would get two true-up bills in the first year—one from PG&E for the delivery charges, and one from VCE for the generation charges. As an example, if a customer’s PG&E true-up month is November and they request a switch to VCE’s annual billing cycle in February, the customer would get a true-up upon their switch in February, then would get their annual true-up, for both PG&E delivery charges and VCE generation charges in November. Going forward, the customer would true-up both sides of the bill annually in November. Historically, NEM customers are used to one annual bill and this change would keep that intact except for the first year.

89

2

REVISION TO APPROVED NEM POLICY

Staff recommends a policy modification based on customer feedback. NEM policy item #4 is the only section of the policy that would be amended. The revised policy is shown below in redline showing the addition and the strikeout.

4. NEM customers on monthly billing cycles may choose to adopt an annual billing cycle. It is

recommended but not required that the request coincide with their existing PG&E true up

period. The request must coincide with their existing PG&E true-up period.

This change will allow customers to switch to an annual billing cycle at any time during the year.

When customers make this request, VCE and call center staff will inform them that 1) their off-

cycle requests may result in two true-up bills in the first year and 2) their accounts will be

trued-up when they switch. It is expected that a small number of customers will use this

option, but the proposed change will provide VCE staff with the flexibility to accommodate

these requests.

90

1

VALLEY CLEAN ENERGY ALLIANCE

Staff Report – Item 17

TO: VCE Board of Directors

FROM: Mitch Sears, Interim General Manager

Jim Parks, Director of Customer Care and Marketing

SUBJECT: Approval of VCE Sponsorship Guidelines

DATE: February 13, 2020

RECOMMENDATION

1. Approve a resolution adopting the attached “Valley Clean Energy Sponsorship Program Guidelines” and authorizing the Interim General Manager to make minor amendments to the guidelines as-needed provided they are consistent with the intent and purpose of the guidelines.

BACKGROUND and ANALYSIS

VCE staff occasionally get requests to sponsor organizations, projects, or events, but have not up to this point, had a policy in place to guide sponsorship decisions. The attached document contains sponsorship guidelines and a sponsorship application to help guide staff when these requests come in. VCE currently has a sponsorship budget of approximately $6,000 per year.

The purpose statement contained in the Guidelines is:

Purpose of the program The goal of Valley Clean Energy’s sponsorship program is to increase awareness of VCE and the benefits it provides, build community alliances, support sustainability, increase electrification and energy efficiency, and support our community-based nonprofit partners. We hope to strengthen the connections between quality of life for the people in our region and the sustainability of the places they share.

Staff proposes that VCE-sponsored events will be exempt from the Guideline application process. These are events that VCE has sponsored in the past and/or staff believes will provide benefits to VCE by getting our message out to the community. Past events have included the Honey Festival, Carnitas Festival, Salmon Festival, Tomato Festival and the Yolo County Fair. The application process is intended to be used for events, programs and organizations where VCE or its customers will receive benefits, but VCE may not be involved beyond the sponsorship of an event.

Staff also requests permission to make minor adjustments to the Guidelines without returning to the Board for approval provided the minor amendments are consistent with the purpose of the guidelines. It is difficult to develop this type of policy that anticipates all potential requests.

91

2

Staff expects changes will be needed as the sponsorship program evolves. Staff believes that providing authorization for staff to make minor amendments to the policy would be an effective tool to adapt the policy provided the amendments are consistent with the intent and purpose of the policy. If there are significant changes proposed, staff would return to the Board for authorization.

ATTACHMENTS

1. Sponsorship Guidelines 2. Resolution

92

1

Valley Clean Energy Sponsorship Program Guidelines

Purpose of the program The goal of Valley Clean Energy’s sponsorship program is to increase awareness of VCE and the benefits it provides, build community alliances, support sustainability, increase electrification and energy efficiency, and support our community-based nonprofit partners. We hope to strengthen the connections between quality of life for the people in our region and the sustainability of the places they share.

Eligible applicants While VCE’s sponsorship program is designed to harness the ingenuity and leadership of forward-thinking individuals within our communities, all applicants must be incorporated nonprofit or municipal organizations within VCE’s service territory and/or providing services to VCE customers and/or aligns with VCE mission and goals. These include but are not necessarily limited to community-based non-profits, chambers of commerce, property-based improvement districts, neighborhood associations, school districts, local governments, and homeowners’ associations. Awarded sponsorship funds will be disbursed only to the identified applicant.

Eligible sponsorships To be eligible for funding, an applicant must be able to demonstrate that the proposed funds have a connection to VCE’s mission and business objectives and/or encourages economic development that benefits VCE’s customers. The sponsorship must promote positive change in the community/area it is intended to serve. This may include, but is not necessarily limited to initiatives promoting greenhouse gas reduction; improvements to increase energy efficiency or promote economic development; events promoting sustainability and efficiency, etc.

Organizations and projects that are not eligible to apply Some organizations/activities are ineligible for sponsorship funding. Examples include:

• Political or individual lobbying activities. • Religious activities, in whole or in part, for the purpose of furthering religious doctrine.

(Faith-based organizations may be considered if they provide services to all clients regardless of denomination.)

• Organizations that discriminate on the basis of race, creed, color, sex, or national origin. • General operating support or travel expenses. • School-affiliated field trips, fundraisers, sports teams, graduations or performing arts

events. • Organizations whose services are not provided in VCE’s service territory. • Donations of VCE electric service for which a fee is normally charged.

VCE’s mission and values

93

2

At Valley Clean Energy, our mission is to deliver clean electricity, product choice, investment in the community, and greenhouse gas emission reductions—all with local control at competitive prices. VCE is proud to give back to our community by supporting efforts that improve quality of life in our region. Through the financial support of programs, organizations, and events, we seek partnerships with eligible applicants that support projects, initiatives and events that make a difference and align with and promote the following:

1. Sustainability/greenhouse gas reductions a. Renewable energy b. Energy efficiency c. Electrification measures d. Energy security e. Energy storage f. Demand response g. Environmental stewardship

2. Education a Focusing on areas related to VCE’s mission such as environmental sustainability b. Innovative educational programs

3. Community a. Healthy and Sustainable Communities

4. Awareness of VCE 5. Reinvestment in the community

Funding priorities From among all eligible sponsorships, VCE will prioritize funding for those that include one or more of the following elements:

• Promotion of energy efficiency, energy conservation and greenhouse gas reduction. • New investment in emerging renewable energy resources and technologies. • Education related to energy efficiency, renewable energy or STEM-related fields. • Services provided to low-income electricity customers. • Community and workforce development, particularly for diverse and underserved

communities. • Energy-related programs focused on disadvantaged communities.

Sponsorship amounts Sponsorships range depending on need, alignment with VCE mission and goals, cost share, and availability of funds. Sponsorships are typically in the range of $100 to $1,000.

Matching requirements Matching funds may be required depending on the sponsorship. For general event sponsorships, recipients may be required to identify match funds. For project sponsorships, a

94

3

minimum 50% match is required. Projects with higher match funding will receive higher priority for sponsorship funds. Matching funds may be provided as cash, in-kind, or a combination of cash and in-kind. In-kind contributions are defined as materials or labor that an organization commits to a project in-lieu of cash. For materials, we request that applicants use the retail value of the goods or materials provided.

Funding disbursements Funding disbursements will be lump-sum.

Fiscal and performance reporting

Project sponsorship recipients may be required to submit performance reports that document progress toward accomplishing project milestones and achieving identified performance metrics. Reporting requirements will be determined individually for each funded project and based upon that project’s unique characteristics.

How to apply To apply for a sponsorship, please fill out the attached application. Please note: Application submission is not a guarantee of a funding award.

95

4

Request for Sponsorship from Valley Clean Energy

Application

Organization Name:

Organization Contact:

Title:

This request is for (circle one):

a. Non-profit

b. School/Educational Foundation

c. Chambers/Business Group

d. Local government

e. Other

I/We are customers of VCE: Yes No

Address:

City: State:

Zip Code: Phone:

Email:

Organization Website:

Details

a. Event/effort Name:

b. Date of Event:

c. Location:

d. VCE’s response date:

96

5

e. Other confirmed event sponsors (if applicable):

f. Please provide a brief description of the event/opportunity:

g. Projected Attendance:

h. Target Audience:

Please tell us which of VCE’s community outreach program core focus areas this effort/event supports (Circle all that apply):

a. GHG Reductions and Climate Solutions

b. Local education/schools (with an emphasis on STEM programs)

c. Basic Needs (food, housing, family support serves, etc.)

d. Yolo County Business Communities

e. Yolo County Key Industries/Key Economic Drivers

f. Creating Visibility Awareness for VCE’s service territory

g. Other (please describe)

Please provide additional information you may have about the event/effort (optional

Sponsorship Elements

a. Please explain how VCE will benefit from sponsoring the event/effort (i.e.

brand/logo recognition, signage, public relations, print/program ad, onsite

opportunities, etc.):

97

6

b. Requested sponsorship amount:

Please submit your form to Valley Clean Energy at least 30 days in advance of the event.

Thank you for considering VCE to sponsor your effort/event.

98

1

VALLEY CLEAN ENERGY ALLIANCE

RESOLUTION NO. 2020-___

RESOLUTION OF THE BOARD OF DIRECTORS OF THE VALLEY CLEAN ENERGY ALLIANCE ADOPTING THE VALLEY CLEAN ENERGY SPONSORSHIP PROGRAM GUIDELINES

WHEREAS, the Valley Clean Energy Alliance (“VCE”) is a joint powers agency established under the Joint Exercise of Powers Act of the State of California (Government Code Section 6500 et seq.) (“Act”), and pursuant to a Joint Exercise of Powers Agreement Relating to and Creating the Valley Clean Energy Alliance between the County of Yolo (“County”), the City of Davis (“Davis”), the City of Woodland and the City of Winters (“Cities”) (the “JPA Agreement”), to collectively study, promote, develop, conduct, operate, and manage energy programs; WHEREAS, VCE is engaged with communities located within our agency jurisdictions; and, WHEREAS, the purpose of a Sponsorship Program is to increase awareness of VCE and the

benefits it provides, build community alliances, support sustainability, increase electrification

and energy efficiency, and support our community-based nonprofit patterns; and,

WHEREAS, in anticipation of VCE receiving requests to sponsor organizations, projects, or events, there is a need to establish guidelines; and, WHEREAS, Sponsorship Program Guidelines will exclude VCE sponsored events; and, WHEREAS, Sponsorship Program Guidelines include an application process intended to be used for events, programs and organizations where VCE or its customers will receive benefits. NOW, THEREFORE, the Board of Directors of the Valley Clean Energy Alliance resolves as follows: 1. Adopt the attached “Valley Clean Energy Sponsorship Program Guidelines” and authorize the

Interim General Manager to make minor amendments to the guidelines as-needed provided they are consistent with the intent and purpose of the guidelines.

99

2

PASSED, APPROVED, AND ADOPTED, at a regular meeting of the Valley Clean Energy Alliance, held on the ___ day of _____________ 2020, by the following vote: AYES: NOES: ABSENT: ABSTAIN: _____________________________________ Don Saylor, VCE Chair _________________________________ Alisa M. Lembke, VCE Board Secretary Attachment A: Valley Clean Energy Sponsorship Program Guidelines

100

3

Attachment A

Sponsorship Guidelines

101

VALLEY CLEAN ENERGY ALLIANCE Board of Directors Meeting

Staff Report - Item 18

____________________________________________________________________________________

TO: VCEA Board FROM: Alisa Lembke, Board Clerk/Administrative Analyst SUBJECT: Recognition of Community Advisory Committee Members Gerry Braun and Christine

Shewmaker DATE: February 13, 2020

Recommendation Staff recommends recognizing via Resolution the service of Community Advisory Committee original Chair, Gerry Braun, and original Vice Chair, Christine Shewmaker. Attachments: Resolution recognizing Gerry Braun Resolution recognizing Christine Shewmaker

102

VALLEY CLEAN ENERGY ALLIANCE

A RESOLUTION HONORING GERRY BRAUN FOR HIS SERVICE AS THE ORIGINAL CHAIR OF THE VCE COMMUNITY ADVISORY COMMITTEE

WHEREAS, Gerry Bruan, resident of the City of Davis, served on the Davis Community Choice Energy Advisory Committee and participated with City staff in the investigaton and efforts to determine the feasibility of creating a local Community Choice Aggregation program; and, WHEREAS, in December 2016, Valley Clean Energy Alliance Joint Powers Agency was formed, and the Board of Directors created the Community Advisory Committee at which time, Gerry Braun was appointed as a member; and WHEREAS, Gerry Braun has served as the original Chair from the inception of the VCE Community Advisory Committee; and WHEREAS, his leadership on the Community Advisory Committee was instrumental in helping VCE launch successfully, navigate the challenges of VCE’s early operations, and form an effective Community Advisory Committee; and WHEREAS, his career in the energy sector and deep experience in energy planning and regulatory matters contributes significantly to the Board’s confidence in the community advisory process; and WHEREAS, his commitment to community based power and environmental sustainability contributed significantly in forming and launching Valley Clean Energy as a Community Choice Aggregation program; and WHEREAS, his knowledge and understanding of the needs of the community of customers enriches the Valley Clean Energy Board of Directors’ and Community Advisory Committee’s perspective and efficacy; and WHEREAS, his commitment to greener, more renewable sources of locally controlled energy for local communities enhances the value that Valley Clean Energy Alliance offers its customers; and NOW THEREFORE, on February 13, 2020, we, as the Board Chair and Interim General Manager, on behalf of the VCE Board of Directors, do hereby extend heartfelt appreciation and gratitude to Gerry Braun for his outstanding service to VCE and recognition of his leadership of the Community Advisory Committee of Valley Clean Energy as its first Chair.

__________________________________ __________________________________ Don Saylor Mitch Sears Board Chair Interim General Manager

103

VALLEY CLEAN ENERGY ALLIANCE

A RESOLUTION HONORING CHRISTINE SHEWMAKER FOR HER SERVICE AS THE ORIGINAL VICE-CHAIR OF THE VCE COMMUNITY ADVISORY COMMITTEE

WHEREAS, the City of Woodland became a member of Valley Clean Energy Alliance Joint Powers Agency on June 13, 2017, at which time, Christine Shewmaker was appointed as a member on the Advisory Committee; and, WHEREAS, Christine Shewmaker has served as the original Vice Chair from the inception of the VCE Community Advisory Committee; and, WHEREAS, her leadership on the Community Advisory Committee was instrumental in helping VCE launch successfully, navigate the challenges of VCE’s early operations, and form an effective Community Advisory Committee; and WHEREAS, her career in the plant biology / plant molecular biology field and experience as a community activist on climate change contributes significantly to the Board’s confidence in the community advisory process; and, WHEREAS, her knowledge and understanding of the needs of the community of customers enriches the Valley Clean Energy Board of Directors’ and Community Advisory Committee’s perspective and efficacy; and WHEREAS, her commitment to greener, more renewable sources of locally controlled energy for local communities enhances the value that Valley Clean Energy Alliance offers its customers. NOW THEREFORE, on February 13, 2020, we, as the Board Chair and Interim General Manager, on behalf of the VCE Board of Directors, do hereby extend heartfelt appreciation and gratitude to Christine Shewmaker for her outstanding service to VCE and recognition of her leadership of the Community Advisory Committee of Valley Clean Energy as its first Vice-Chair.

Don Saylor Mitch Sears Board Chair Interim General Manager

104

1

VALLEY CLEAN ENERGY ALLIANCE

Staff Report – Item 19

TO: Valley Clean Energy Alliance Board

FROM: Mitch Sears, Interim General Manager Michael Roberts, SMUD Principal, Energy Contracts

SUBJECT: Aquamarine Solar Power Purchase Agreement Approval

DATE: February 13, 2020

RECOMMENDATIONS Staff recommends the Board adopt a resolution that: 1. Approves the Power Purchase Agreement (PPA) with Aquamarine Westside, LLC for the

purchase by VCE of a 50 MW share of the 250 MW Aquamarine Solar Project under development by Westlands Solar Park, LLC.

2. Authorizes the Interim General Manager to execute the PPA substantially in the form attached and, in consultation with General Counsel, to make minor changes to the PPA so long as the term and price are not changed.

BACKGROUND On August 13, 2018, SMUD, on behalf of VCE, issued a solicitation for Long Term Renewable power supply. Responses, which were received on September 17, 2018, included proposals from 13 developers for 32 projects, of which 23 were unique (some developers bid variants of the same project). The Board received multiple updates on the solicitation process throughout 2018 and 2019. The solicitation and evaluation of proposals were managed by SMUD and overseen by VCE staff. The VCE team that developed and negotiated the Power Purchase Agreement (PPA), included highly experienced SMUD staff, the VCE Interim General Manager, and VCE’s regulatory counsel Kevin Fox of Keyes and Fox. Pass/Fail Consideration After compiling and consolidating the technical details from each response, Projects were evaluated for Pass/Fail criteria. The Board will recall that the solicitation for proposals made clear that projects, at a minimum, had to satisfy certain criteria to even be considered. Those criteria with effective pass/fail scoring included:

105

2

Table 1. Pass/Fail Criteria

Criteria Pass/Fail Threshold

Siting Projects cannot be proposed for land with a prime agricultural designation. Projects cannot be proposed for areas that are designated as Renewable Energy Transmission Initiative (“RETI”) Category 1 or 2. Category 1 lands are those identified where development is prohibited by law or policy. Category 2 lands are those where cultural or environmental conflicts would be highly likely and/or controversial.

Development Status

Projects must at least have filed a permit application with the relevant land use authority and received an acknowledgment of the filing from such authority. Projects must provide evidence of site control.

Out-Of-State Resources

Projects must be located within California.

Interconnection Status

Projects must already be in an interconnection queue and have requested full capacity deliverability for the project interconnection.

Preliminary Screening The next step was to perform a preliminary screening that was used to reduce the project list to a limited number of projects that would then receive an economic evaluation and consideration for a short list. In the preliminary screening, projects were ranked. Ranking criteria included:

• Permit progress

• Status of Cultural/Environmental surveys

• Whether or not sensitive cultural or habitat resources were identified

• CEQA status

• Whether wildlife permits were needed and obtained

• Location of project (northern California preferred)

• Whether the project was local, regional or other

• Whether project could be online and delivering energy by April 1, 2021

Only the 9 highest ranked projects were selected to move on to the short list evaluation stage. Short List Evaluation Economic evaluations were performed on the 9 projects, where the levelized contract prices were compared to expected value from sales of the power component back to the CAISO and resource adequacy capacity value. The result of the economic evaluations was to determine an implicit renewable premium for each project, compared to VCE’s current renewable costs. The short-term Renewable Energy Certificate (REC) contracts in VCE’s 2020 power portfolio have an average renewable premium of $13.79/MWh. Key factors in determining which projects to short list were:

• Total energy delivered from all selected projects will meet the legal requirement for significant energy under long term contract in the upcoming Compliance Period.

• Price (value)

• Selection of projects will supply at least the VCE minimum 42% renewable content.

106

3

Short List Selection Two projects were short listed, a 72 MW solar project, and the 40 MW Aquamarine solar project. Neither of the projects are considered either Local or Regional projects by VCE’s definition. They both were selected for the following key reasons:

• The two projects provided a renewable volume totaling at least 42% of VCE overall energy portfolio

• Both projects had favorable pricing

• No other combination of projects provided enough energy to satisfy the RPS minimum long-term contracting requirements which begin in 2021.

Remaining Selection Process Following the short-list process, staff executed letters of intent, collected short list deposits and began PPA negotiations. This staff report discusses the first PPA negotiated with the Aquamarine project in the Westlands solar park. During the course of PPA negotiations, the original 40 MW project size was increased to 50 MW.

WESTLANDS SOLAR PARK/AQUAMARINE PROJECT Westlands solar park is a power generating complex located on 20,000 acres of “brownfield” land within the Westlands Water District in Kings County, CA. The project will be built on land that has already been retired, or is planned to be retired, from full agricultural use. Westlands plans to phase in construction of potentially 2,700 MW of solar power including storage and transmission facilities. Aquamarine is a 250 MW solar generating facility and is included in the first phase of construction for Westlands. VCEA has negotiated the purchase of 50 MW of power from this project. During discussions staff discovered a mutual interest between VCEA and Westlands regarding the contracting of additional capacity from subsequent construction phases of the Westlands Solar Park. VCEA executed a Letter of Intent for the initial 50 MW PPA from the Aquamarine Project, 50 MW from the next 250 MW project (to be named later), and a 50MW option for additional solar power from additional phases. For clarity, each tranche of power purchased from the Westlands solar park will be governed by its own PPA. The first PPA is a 50 MW portion of the first 250 MW phase of construction; the second 50 MW PPA would derive from the second phase of construction, and the option for a third 50 MW PPA would come from perhaps another phase of construction.

KEY PPA TERMS AND CONDITIONS Price and Impact to VCE Budget $[Price Redacted]/MWh with 0% escalation. Specifically, the price is held flat, or levelized, across the 15 year term. This price can potentially be reduced by $2.49/MWh to $[Price Redacted]/MWh if VCE can establish and maintain certain credit support requirements. Forms of credit support generally are cash, Letter of Credit, or an investment-grade credit rating on VCE’s long-term indebtedness.

107

4

Staff expects REC costs from Aquamarine, as a portion of the overall PPA cost, to be favorable to VCE’s budget. For 2020, VCE paid an average of $13.79/MWh for RECs alone. This PPA is structured as fixed price, versus VCE’s short term renewable contracts, which are based on index power price plus a fixed REC premium. In addition to contributing savings on the average cost of RECs in the near term, a fixed price contract reduces the volatility in VCE’s future power costs. This project is expected to yield 134,684 MWh per year. Based on historical energy prices at the project’s point of delivery, staff have estimated an implicit renewable premium of $8.13/MWh for the project in 2021, compared to VCE’s average short-term renewable cost in 2020 of $13.79/MWh. As energy prices at the project’s point of delivery vary from historical, this will affect the implicit renewable premium accordingly. This reduces VCE’s annual renewable costs by approximately $762,000. The Aquamarine project also provides Resource Adequacy (RA) capacity which has a value but is not included in the $762,000 cost savings above. An estimate of the RA value is not provided as the CPUC is currently assessing the RA value that solar photovoltaic (PV) projects provide. In any case, any RA value would be in addition to the cost savings noted above. Term Pricing for the Aquamarine Project was offered for both 15 year and 20 year terms. Staff selected the 15 year term because of the more favorable pricing for the shorter term. Expected Annual Energy Product/Portfolio Share of Renewable Provided The expected annual energy production is 134,684 MWhs, which would supply 18.2% of VCEs annual energy retail needs. Table 2 below shows the anticipated Aquamarine project annual production.

Table 2. Incremental Portfolio Contribution from Long Term Renewable PPAs

Full Capacity Deliverability Status The project has requested Full Capacity Deliverability Status (FCDS) from the CAISO, which means they have an interconnection agreement that ensures that once transmission upgrades (paid for by Westlands) are completed, the full output of the Project can be accommodated by the transmission system. Having FCDS also ensures that VCE can benefit from the Resource Adequacy Capacity allocated to the Project.

Project COD PPA Capacity 2021 2022 2023

Short Listed Projects

Project 1 11/1/2021 0 MWs 0 0 0

Aquamarine 8/1/2021 50 MWs 47,438 134,684 134,011

Project 2 Phase 2 12/1/2021 0 MWs 0 0 0

Project 2 Option 7/1/2022 0 MWs 0 0 0

Total Supply 50 MWs 47,438 134,684 134,011

VCEA Retail Load 740,117 739,992 741,517

RPS Minimum Requirements 35.8% 38.5% 41.3%

Minimum LT Contracting Requirement 171,985 185,183 198,819

Incremental Contribution to Renewable Content 6.4% 18.2% 18.1%

108

5

CONCLUSION Based on results from the solicitation process and PPA negotiation, VCE and SMUD staff believe the price and terms of the PPA support VCE’s policy objectives, help meet regulatory requirements, and are competitive in the current market for utility scale solar PV in California.

REQUESTED ACTION Adopt the resolution detailed above. ATTACHEMENTS 1. Resolution 2. Power Purchase Agreement (Redacted)

109

6

Attachment A

Aquamarine Power Purchase Agreement (Redacted)

110

1

VALLEY CLEAN ENERGY ALLIANCE

RESOLUTION NO. 2020-___

RESOLUTION OF THE BOARD OF DIRECTORS OF THE VALLEY CLEAN ENERGY ALLIANCE (VCE)

APPROVING ENTERING INTO A POWER PURCHASE AGREEMENT WITH AQUAMARINE WESTSIDE, LLC AND AUTHORIZING INTERIM GENERAL MANAGER IN CONSULTATION WITH

LEGAL COUNSEL TO FINALIZE AND EXECUTE THE POWER PURCHASE AGREEMENT WHEREAS, the Valley Clean Energy Alliance (“VCE”) is a joint powers agency established under the Joint Exercise of Powers Act of the State of California (Government Code Section 6500 et seq.) (“Act”), and pursuant to a Joint Exercise of Powers Agreement Relating to and Creating the Valley Clean Energy Alliance between the County of Yolo (“County”), the City of Davis (“Davis”), the City of Woodland and the City of Winters (“Cities”) (the “JPA Agreement”), to collectively study, promote, develop, conduct, operate, and manage energy programs; WHEREAS, on August 13, 2018, Sacramento Municipal Unified District (“SMUD”), on behalf of VCE, issued a solicitation for Long Term Renewable power supply; WHEREAS, after compiling and consolidating the technical details from each response received and evaluating for consideration, VCE Staff executed letters of intent, collected short list deposits, and began negotiating power purchase agreements (“PPA”) for two (2) projects; WHEREAS, Westlands Solar Park (“Westlands”) is a power generating complex located on

20,000 acres of “brownfield” land within the Westlands Water District in Kings County,

California with Westlands planning to phase in construction of potentially 2,700 megawatts

(“MW”) of solar power including storage and transmission facilities;

WHEREAS, Aquamarine is a 250 MW solar generating facility and is included in the first phase of construction for Westlands; and, WHEREAS, a PPA was negotiated with Aquamarine Westside, LLC for VCE to procure power from a fifty (50) MW share of the two hundred fifty (250) MW Aquamarine Solar Project being developed by Westlands. NOW, THEREFORE, the Board of Directors of the Valley Clean Energy Alliance resolves as follows: 1. The Power Purchase Agreement (PPA) with Aquamarine Westside, LLC for the procurement

of power by Valley Clean Energy Alliance of a fifty (50) megawatt (MW) share of the two hundred fifty (250) MW Aquamarine Solar Project under development by Westlands Solar Park, LLC is hereby approved.

2. The Interim General Manager is authorized to execute the PPA substantially in the form attached hereto on behalf of VCE, and in consultation with legal counsel is authorized to approve minor changes to the PPA so long as the term and price are not changed.

111

2

PASSED, APPROVED, AND ADOPTED, at a regular meeting of the Valley Clean Energy Alliance, held on the ___ day of _____________ 2020, by the following vote: AYES: NOES: ABSENT: ABSTAIN: _____________________________________ Don Saylor, VCE Chair _________________________________ Alisa M. Lembke, VCE Board Secretary Attachment A: Exhibit A - Power Purchase Agreement with Aquamarine Westside, LLC

112

3

Attachment A

Power Purchase Agreement with Aquamarine Westside, LLC

113

114

115

116

117

118

119

120

121

122

123

124

125

126

127

128

129

130

131

132

133

134

135

136

137

138

139

140

141

142

143

144

145

146

147

148

149

150

151

152

153

154

155

156

157

158

159

160

161

162

163

164

165

166

167

168

169

170

171

172

173

174

175

176

177

178

179

180

181

182

183

184

185

186

187

188

189

190

191

192

193

194

195

196

197

198

199

200

201

202

203

204

205

206

207

208

1

VALLEY CLEAN ENERGY ALLIANCE

Staff Report – Item 20

TO: Valley Clean Energy Board of Directors

FROM: Mitch Sears, Interim General Manager

SUBJECT: VCE Strategic Plan Development Process

DATE: February 13, 2020

RECOMMENDATIONS 1. Approve the strategic plan development process and timeline contained in this staff report; 2. Direct the VCE Board Subcommittee and staff to develop a strategic plan for consideration

by the full Board by mid-2020. BACKGROUND and ANALYSIS After several years of feasibility analysis and study, Valley Clean Energy (VCE), formed in December 2016. At its initial meeting, the VCE Board adopted a mission statement to help direct the formation and early operations of the organization. The mission statement was supplemented with the November 2017 adoption of a more detailed vision statement intended to provide both short and longer-term guidance for the organization. At the January 2020 Board meeting staff provided a review of the VCE Vision statement and general progress toward VCE’s Vision. During the presentation, staff noted the interest expressed by Board members (and shared by staff and the Community Advisory Committee), to develop a multi-year strategic plan to guide VCE as the organization transitions from early operations. The Board subcommittee and staff met in mid-January to discuss the potential development of a 3 to 5-year strategic plan for VCE. Following a review of the Vision and Mission statements, the Subcommittee discussed a broad outline for development of a strategic plan. The Board subcommittee and staff agreed that as VCE matures and becomes more established, adoption of a multi-year strategic plan will make VCE more effective in achieving its vision and mission.

Key outcomes of the discussion between the Board subcommittee and staff which have informed the recommendations in this report included:

• The scope of VCE’s initial strategic plan should have a tight focus on core policy questions and use the Vision and Mission statements as a starting point

• The development process should be efficient with a goal to develop a draft plan for consideration by the full Board by mid-2020 to help inform the 2020/21 fiscal year budget

• Utilize the subject matter expertise of the Community Advisory Committee, SMUD,

209

2

VCE’s consultants, and VCE member jurisdictions in the development and review of the plan as it is being drafted

• Solicit input and feedback from members of key customer classes The purpose of this report is to: (1) provide a summary of early stage activities related to the development and eventual adoption of a strategic plan and (2) propose a plan development process and timeline for consideration by the Board. Board direction will help frame the effort and allow for initiation of the planning process. Early Stage Activities The following early stage activities are included for reference. They are not intended to limit Board discussion but may be useful as a starting point for the strategic plan discussion.

• VCE Vision Statement. https://valleycleanenergy.org/wp-content/uploads/VCEA-Vision-Statement-11-16-17.pdf

• VCE Mission Statement. https://valleycleanenergy.org/wp-content/uploads/Resolution-2016-001-VCEA-Name-Mission.pdf

• Staff analysis. In early 2019 staff initiated an internal exercise to assess VCE’s progress toward stated Board objectives that are captured in the VCE Vision and Mission statements. Staff (including SMUD contract staff), utilized a technique that assesses an organization’s strengths, weaknesses, opportunities, and threats (SWOT analysis). The objective of this exercise was to evaluate and calibrate staff work and resources to align with the VCE’s guiding statements. The summary of this exercise is included as Attachment 1 and can help inform the Board’s discussion regarding development of a strategic plan for VCE.

• Board Subcommittee briefing. The following suggestions were provided to the Board subcommittee in mid-January to help frame the initial discussion on strategic plan development.

o VCE should maintain a multi-year Strategic Plan, updated at a consistent cadence, and encompassing all key areas of the business.

o The plan should be the basis for: ▪ Annual organization and individual goals ▪ Annual budgets ▪ Key decisions and priorities

o The potential cadence of plan and organizational review could be: ▪ Strategic Plan update every two years ▪ Mission & Vision to be reviewed and updated every three years, or as

business changes demand ▪ Organization and employee goals updated annually ▪ Organization budgets updated annually

• Integrated Resource Plan (IRP). VCE is required to submit an updated IRP to the CPUC on a two-year rolling cycle. The original IRP submitted in 2018 is currently being updated for submission to the CPUC by July 1, 2020. The IRP update process is

210

3

underway and can help inform the strategic planning process generally and specifically with regard to the power procurement and portfolio goals/objectives/strategies that would be a central feature of the strategic plan. The current IRP is posted to the VCE website at: https://valleycleanenergy.org/wp-content/uploads/Reso-2018-021-VCEA-Int-Resrc-Plan-.pdf

Proposed Plan Development Process and Timeline The following planning process outline and timeline are suggested if the Board’s goal is to adopt a strategic plan by mid-2020. If the Board selects a different goal date for plan consideration/adoption, adjustments to dates and activities can be made. Based on Board direction, staff will develop a detailed project calendar based on the desired plan adoption date. The project calendar would be based on the following key activities and milestones: Key activities/milestones outline: • Board direction – February 13, 2020 (current action). Board direction on strategic plan

development process and timeline.

• Board Workshop – mid Q1. Conduct Board workshop on strategic plan in late February to establish strategic objectives to guide development of draft plan. This would be a special meeting of the Board organized in a facilitated workshop format.

• Board subcommittee. Direct the Board subcommittee to coordinate with staff to complete development of a working draft plan by late Q1 2020.

• CAC. Activate a CAC Taskgroup to provide input and feedback to staff in the development of the working draft plan (note: CAC Taskgroup formed in late January).

• Stakeholder feedback. Identify members of key customer classes in mid-Q1 2020 and begin draft plan feedback/input collection process in early Q2 2020.

• Draft plan. Present Draft to CAC and Board for review and feedback in mid-Q2 2020.

• Final draft plan. Present final draft to CAC and Board for consideration in late Q2 2020 for adoption by mid-2020 (beginning of FY).

To meet these process milestones the following meetings would be required:

Date Meeting/Milestone Purpose

2/13/20 Board Adopt development process and timeline

Last week of Feb 2020

Board (Special meeting)

Establish strategic objectives to guide development of draft plan

2/27/20 CAC Process update; Taskgroup direction

3/12/20 Board Process update

3/26/20 CAC Process update; Taskgroup report

Late Q1 2020 Milestone Completion of working draft plan end of Q1 2020

Early Q2 2020 Milestone Begin collection of stakeholder feedback

4/9/20 Board Process update; report on working draft

4/23/20 CAC Process update; Taskgroup report on working draft

Mid Q2 2020 Milestone Complete initial draft plan

5/14/20 Board Review/provide direction on draft plan

211

4

5/28/20 CAC Review/provide feedback and recommendation on final draft plan

Late Q2 2020 Milestone Complete final draft plan

6/11/20 Board Consider adoption of final plan

Staff believes that this schedule represents an aggressive but achievable goal of adoption of a strategic plan by June 2020. ATTACHMENTS 1. VCE Staff SWOT Analysis Summary – 2019

212

VCE Internal SWOT Analysis Summary (March 2019)

STRENGTHS

Rank from A to Z (A being the strongest strength of VCE)

A. Local Control - make decisions quickly, nimbleness

B. Customer default into VCE

C. Price Competitive

D. Leveraging SMUD expertise

E. Strong customer base that align with mission

F. Strong alignment with jurisdictions

G. Location – relative to energy usage/solar applicability (sunny/hot)

H. Local expertise – legislature, CAC, energy efficiency

I. Diversity of customer base (Ethnicity and Customer class)

213

WEAKNESSES

Rank 1-6 (1 being the most dangerous to VCE’s success)

1. Finances:

• Lack of Financial Reserves

• No control over revenues – PG&E rates/PCIA exit fees

• Difficult to obtain credit rating/financing

2. Lack of brand awareness

3. Lack of full access to our customer data

4. Lack of VCE employees

• Limited staff

• Thin structure – no employee/knowledge depth

5. Uncertainty in customers opt out

• Direct Access

• General

6. Steep learning curve of electric utility industry for decision makers

214

OPPORTUNITIES

Priority 1 – 1 to 2 years (July 2019-June 2021)

Priority 2 – 2 to 3 years (July 2020-June 2022)

Priority 1:

Cost reduction of LT renewable resources

Design Local customer programs

Adding new member jurisdictions

• Discussions/preparations

• Operational (1-2)

Build reputation and loyalty

Regional efforts

• Partner with regional organizations (i.e. SACOG grant)

Grow electric revenues through electrification within the jurisdictions (i.e. electric vehicles,

building electrification) -

• Planning

Increase understanding of electric utility industry for our stakeholders (customers, board)

Coordinate with other jurisdictions on assisting with recovery from disasters

PG&E Bankruptcy – (prepare a separate SWOT analysis)

215

OPPORTUNITIES

Priority 1 – 1 to 2 years (July 2019-June 2021)

Priority 2 – 2 to 3 years (July 2020-June 2022)

Priority 2:

Offer Local customer programs (as financial resources become available)

Regional efforts

• Improve regional economic vitality (i.e. Reinvest in the community – energy efficiency,

EV infrastructure, job creation)

Coordinate with other jurisdictions to obtain state/local funds for energy efficiency programs for

our customers (i.e. loans/grants)

Grow electric revenues through electrification with in the jurisdictions (i.e. electric vehicles,

building electrification) -

• Implementation

Obtain grants for energy efficiency programs or infrastructure

216

THREATS

Uncertainty of annual PG&E rates/PCIA fee

Regulatory Uncertainty - CPUC

New legislation

Negative publicity of CCA’s

Direct Access – SB 237

PG&E Bankruptcy

Other CCA’s adding new member agencies in central valley

217

VALLEY CLEAN ENERGY ALLIANCE BOARD OF DIRECTORS

Staff Report – Item 21

____________________________________________________________________________________

TO: VCE Board of Directors FROM: Mitch Sears, Interim General Manager SUBJECT: Valley Clean Energy Policy regarding potential PG&E allocation of GHG-free (Large Hydro

and Nuclear) resources to Community Choice Aggregators DATE: February 13, 2020

RECOMMENDATION

1. Accept the large hydro allocations from PG&E, but not accept the nuclear allocations.

BACKGROUND Valley Clean Energy (VCE) has set a goal for 2020 to serve customers with a minimum 75% GHG-free energy. In 2020, forty-two percent (42%) of VCE’s GHG-free energy portfolio are resources that qualify as renewable energy under the state’s renewable portfolio standard program (RPS) and 33% are resources that do not qualify under the RPS, but are considered GHG-free. Large hydro and nuclear do not emit any GHG emissions, but don’t qualify under the state’s RPS. VCE has procured all of the renewable resources and GHG free (large hydro) that we expect are required to meet this target in 2020. As additional CCAs have started operating with their own GHG-free targets, staff have seen the market for GHG-free resources become tighter and the cost has increased. PG&E owns or contracts for a number of GHG-free resources (including large hydro and nuclear from Diablo Canyon Power Plant). PG&E has been able to count these resources on its power content label (PCL) to meet its GHG-free targets. Load serving entities (LSEs), on the other hand, have been paying for those same assets through PCIA, yet do not receive any of the GHG-free benefits. In mid-2019, CCAs approached PG&E to discuss whether PG&E would be agreeable to selling energy from their large hydro facilities1. PG&E ultimately refused to make sales in 2019, but subsequently approached CCAs and offered to allocate GHG-free resources (nuclear and large hydro) to CCAs and other eligible load serving entities (LSEs).

1 Large hydro and nuclear resources count as GHG-free on the power content label (PCL), and investor-owned utilities

(IOUs) have been benefiting from counting those resources to meet their GHG-free targets. LSEs, on the other hand, have been paying for those same assets through PCIA, yet do not receive any of the GHG-free benefits through the PCL.

218

2

There is a separate, similar effort occurring in the Power Charge Indifference Adjustment (PCIA) Phase 2 Working Group 3 (WG 3) that is focusing on the allocation of GHG-free energy, among other things. Since the PCIA effort is expected to take effect in 2021, the allocations addressed in this staff report are considered an interim approach for 2020 only until PCIA decisions are finalized. Both the PCIA proposal and the interim allocation proposal are works in progress and subject to change pending final CPUC approval. The purpose of this report is to provide background and information for the CAC to discuss staff’s recommendation to accept VCE’s share of the large hydro allocation but not the nuclear allocation under the interim proposal for 2020 only. Interim Proposal by PG&E The key elements of the interim proposal include:

• Limited in time to 2020 • Limited in the resources to which it applies:

o In-state o Large hydroelectric o Nuclear

• Only available to retail suppliers whose customers pay PCIA with large hydroelectric and nuclear in their PCIA vintage

• Requires active agreement between retail suppliers to offer and to take generation • Requires that the CPUC approve a mechanism for the allocation of such generation • No payment required

There is no obligation to accept this allocation of GHG-free energy. An LSE can choose to accept neither resource pool, one or the other, or both. The PCIA is a non-bypassable charge set annually by the CPUC. The interim proposal and allocation mechanism, and whether VCE accepts an allocation, has no impact on PCIA charges. Regardless of what happens with the allocation mechanism, all customers, VCE customers included, pay for, and will continue to pay for PG&E large hydroelectric and nuclear generation costs through the PCIA. A link to the PG&E Advice Letter which details the interim proposal is included in the reference section at the end of this staff report. ANALYSIS Under the interim proposal, PG&E will allocate to each eligible LSE its load share of large hydro (hydro pool) and/or nuclear resources (nuclear pool) based on an LSE’s election. VCE accounts for approximately 1% of PG&E’s share. Staff estimates that the allocation PG&E offers to VCE may contain the following: • 90 GWh of large hydroelectric power • 140 GWh of nuclear power

219

3

The volume that each LSE receives will ultimately depend on the volume of electricity generated by each resource pool in 2020 and the proportion of PG&E’s load served by the LSE. PG&E has identified public historical production data for each resource pool and will provide ongoing allocation amounts for LSEs to forecast and keep track of allocation amounts. VCE is eligible for this allocation as an LSE (as defined in the CAISO Tariff) that: (1) has forecasted load identified in PG&E’s Energy Resource Recovery Account (ERRA) Forecast Application (ERRA Forecast Departed Load) for the calendar year in which the Allocation Amount is accepted; and (2) serves customers who pay the PCIA departing load charges for the above market costs of Resources. On December 2, 2019, PG&E filed a Tier 3 Advice Letter and requested that the CPUC issue a final resolution by February 1, 2020. The interim proposal will only become effective upon CPUC approval of this Advice Letter and will remain in effect until the earlier of the effective date of a CPUC action on the PCIA Proposal Rulemaking (R.1706-026) ordering an alternative methodology (PCIA Decision) and December 31, 2020. In practice, this means through 2020. Once the Advice Letter is approved and PG&E offers the allocation, the LSE has 30 days to accept its allocation of hydro and/or nuclear pool(s). Any unallocated amounts will revert back to PG&E to use or dispose as it sees fit pursuant to applicable law. In exchange for the allocation by PG&E, the receiving LSE “will waive their ability to make petitions, arguments or filings at the CPUC or at the California State Legislature regarding PG&E not offering any allocation, sale or transfer of Carbon Free Energy or attributes for the period that the eligible LSE accepts the offer. Neither PG&E nor the eligible LSEs will be required to post credit or collateral.” PG&E will provide each LSE with an annual attestation confirming actual year-end totals of generation from the Resource Pool(s) and notify the California Energy Commission of the sale of the Product for purposes of PCL reporting. FISCAL IMPACT VCE has already procured GHG-free resources for 2020. Accepting either allocation (hydro or nuclear) results in a savings to VCE, and not any additional costs. Assuming a conservative estimate of $6/MWh for GHG-free resources based on recent market transactions, the table below estimates that the savings from the large hydro allocation will be $540,000 and the nuclear allocation will be $840,000.

Scenario Allocated GHG- Free Resources

Scenario Total Allocated GHG Free Resources (Large Hydro + Nuclear)

Accepted GHG Free Resources

Potential Savings

A (Hydro + Nuclear)

230 GWh 230 $1,380,00

B (Nuclear only) 140 GWh 140 $840,000

C (Hydro only) 90 GWh 90 $540,000

Scenarios to Consider

220

4

By accepting an allocation of carbon free energy from PG&E, VCE will decrease the volume of previously contracted GHG-free energy we need in 2020 to meet it’s 75% GHG-free target. Staff have prepared three scenarios to consider

• Scenario A - PG&E offers carbon-free allocations up to VCE’s load share percentage (1% of PG&E load), amounting to 230 GWh. VCE accepts all carbon-free allocations – both hydro pool and nuclear pool. Consider option to sell off nuclear allocation if buyers are available.

• Scenario B - PG&E offers carbon-free allocations up to VCE’s load share percentage (1% of PG&E load), amounting to 140 GWh. VCE accepts the nuclear carbon-free allocations.

• Scenario C - PG&E offers carbon-free allocations up to VCE’s load share percentage (1% of PG&E load), amounting to90 GWh. VCE accepts the hydro pool carbon-free allocations.

• Scenario D - VCE rejects allocations from both resource pools.

Some CCA’s are considering acceptance of both allocations with the intent to resell the nuclear allocation to capture cost savings but avoiding Community Advisory Committee Recommendation The Community Advisory Committee (CAC), considered the issues contained in this staff report at a special meeting on February 5th. The CAC engaged in a detailed discussion about the advantages and drawbacks of accepting the allocations. The CAC voted 4-2 to support the staff recommendation to accept large hydro allocations from PG&E, but not accept the nuclear allocations. The CAC’s support was subject to confirmation that: 1) VCE would only be getting the attributes and not the energy and 2) clarification and interpretation of meaning of the statement that the LSE (VCE) “will waive their ability to make petitions, arguments or filings at the CPUC or at the California State Legislature regarding PG&E not offering any allocation, sale or transfer of Carbon Free Energy or attributes for the period that the eligible LSE accepts the offer”. Staff’s understanding is that the allocations are for the GHG free attributes only and that any restrictions are limited to issues associated with the large hydro and nuclear allocations for 2020. Since these questions were raised the day before the writing of this staff report, staff is following up on these questions and will provide confirmation as part of the Board presentation on February 13th. Note: the no votes by CAC members centered on different issues; one with lack of information on the underlying motivation to offer the allocations, and the second on an interest in accepting both allocations for the express purpose of using any cost savings to help fund VCE’s priority local programs/projects. RECOMMENDATION Staff recommends that the Board adopt Scenario C (large hydro only). This is a challenging policy question due to the fact that regardless of VCE’s decision: (1) the Diablo nuclear plant will continue to operate until 2024/25, and (2) VCE customers will pay for the GHG attributes from the plant through the PCIA charge. In addition, the potential savings would help VCE advance its policy goals. These factors are balanced against the potential reputational risk associated with taking VCE’s nuclear allocation. Note: other CCA’s located in PG&E’s service territory have both accepted and rejected the

221

5

nuclear allocation with decisions based on local factors. Links to analysis from several other CCA’s and PG&E’s advice letter are included as references at the end of this report. Staff believes that:

• The potential reputational risk from accepting the nuclear allocation as part of our GHG-free target is greater than the potential savings for accepting this allocation.

• Although there would be monetary savings in 2020 from accepting the nuclear allocation, VCE’s power procurement budget was balanced for 2020 without this additional funding.

• Generally nuclear is not considered a clean fuel source due to risks associated with spent fuel and practical long-term disposal options.

Based on these factors, staff believes that VCE is better served by accepting the hydro allocations for 2020 but not the nuclear allocations. Reference Materials EBCE:

• https://ebce.org/wp-content/uploads/Item-16-Carbon-Free-Allocation-Informational-Item-1.pdf

• https://ebce.org/wp-content/uploads/Item-14-Carbon-Free-Allocation-Questions-.pdf PCE: https://www.peninsulacleanenergy.com/wp-content/uploads/2020/01/2020-01-23-Peninsula-Clean-Energy-Board-agenda-packet-1.pdf PG&E Advice Letter: https://www.pge.com/tariffs/assets/pdf/adviceletter/ELEC_5705-E.pdf

222

1

VALLEY CLEAN ENERGY ALLIANCE

Staff Report – Item 23

TO: VCE Board of Directors

FROM: Mitch Sears, Interim General Manager

Jim Parks, Director of Customer Care and Marketing

SUBJECT: SACOG Grant Update

DATE: February 13, 2020

REQUESTED ACTION

Informational item. No action requested.

BACKGROUND

VCE joined with the cities of Davis and Woodland and Yolo County to apply for a $2.9 million grant from the Sacramento Council of Governments (SACOG). The purpose of the grant is to install electric vehicle charging infrastructure in Yolo County. The proposal was successful, and the grant was approved by the SACOG board of directors on December 20, 2018. The project is titled Electrify Yolo.

Since that time the Electrify Yolo team, made up of VCE member jurisdiction staff, has worked to facilitate a fund swap between SACOG and the City of Davis, and to further develop the project.

UPDATE

The fund swap was approved by SACOG in late December and the Davis city council approved the agreement at the end of January. Now that funding is in place, the Electrify Yolo team is working to implement the project. Staff will be providing a Board presentation at the February 13th meeting that will provide an update on those activities.

223